With numbers below 50 indicating a contraction, the Markit Eurozone Composite Output Index rose nominally month to month, climbing from 46.4 in June to 46.5 in July in the 17-member eurozone.
The composite index measures both service and goods-producing business activity and "both reported lower levels of output in July," Markit said.
Manufacturing suffered a more severe downturn than service businesses. Production in eurozone factories was down to the lowest level since May 2009.
Service sector activity, on the other hand, slowed for the sixth consecutive month, "though the rate of decline eased to its weakest since March," the report said.
The combined indexes showed contraction in Europe's four largest economies. In France, the Composite Output Index reached 47.9. In Germany it slipped to 47.5, a 37-month low. In Italy, the index rested at 43.2, a 3-month low. In Spain, the index hit 33.1, a four-month high.
The figures suggest, "the region looks set for a second consecutive quarterly decline," said Markit Chief Economist Chris Williamson.
"With incoming new business falling at the fastest rate for three years and service sector companies becoming the gloomiest about the outlook since early 2009, there seems little prospect of any improvement soon," he said in a statement.
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