Euro zone manufacturing shrank for the 15th month running in October as output and new orders fell, a survey showed today, fuelling expectations of further easing from the European Central Bank.

Ireland was the only one of the 17 countries using the euro seeing growth.

Manufacturers were the driving force behind the bloc's recovery from the last recession, but the downturn in factory activity that began in smaller periphery countries has now engulfed Germany and France.

Europe is expected to remain the biggest drag on the world economy next year as its sovereign debt crisis rumbles on, and the situation deteriorated further in Italy and Spain - the two countries most worrying investors with whether they can keep paying their debts.

"The situation in the core economies is worsening. Rather than the strength in the core dragging the periphery out of recession it appears more likely that the core will follow the periphery into recession," said Ben May at Capital Economics.

Markit's Eurozone Manufacturing Purchasing Managers' Index (PMI) fell to 45.4 in October from September's 46.1. The October figure was just up from an earlier reported flash reading of 45.3. The index has been below the 50 mark that divides growth from contraction since August 2011.

The manufacturers' output index sank to 45.0 from 45.9.

Earlier data from Germany showed its manufacturing sector shrank for the eighth month and French figures showed a decline in all but one of the last 15 months.

In Spain, likely to become the next country to be bailed out by the European Union, the pace of decline accelerated. The picture was similar in Italy.

Data due on Tuesday is expected to show the bloc's dominant service sector has contracted for all but one of the last 14 months.

Markets were unfazed by the latest data with little movement in European stock markets or the euro.

Sister PMI surveys showed big Asian economies are only slowly picking up after a year spent battling against global headwinds and that Britain's factories are facing a deepening decline.

In the United States manufacturing grew in October at its slowest pace in more than three years, its PMI showed, but an Institute for Supply Management survey said growth in manufacturing picked up modestly as new orders improved.