The Purchasing Managers Index (PMI), a survey of thousands of eurozone manufacturers compiled by Markit research firm, came in at 45.1 in August, down from a flash estimate of 45.3 although up from 44.0 in July.

Any score below the neutral 50 mark indicates contraction.

The surveys are an important leading indicator of economic activity.

"The rate of decline was a little slower than in July, providing some heart that the manufacturing downturn may be easing, but the sector is on course to act as a drag on gross domestic product in the third quarter," said Markit's Rob Dobson.

"Only Ireland saw manufacturing output rise, while larger nations like France and Germany remain in reverse gear," he added.

"The situation in Italy is also becoming more of a cause for concern."

Italy's score hit a 10-month low of 43.6.

Taking manufacturing and services data together, Dobson has already tipped a drop in eurozone GDP for the third quarter of up to 0.6 percent.

And amid faster-falling factory gate prices and rising unemployment, Berenberg Bank's Christian Schulz warned that "for a sustained recovery, a turn-around in investment would be necessary." Howard Archer, an analyst with IHS Global Insight, said that while eurozone manufacturers are being helped by softer input prices, "they will be concerned by the recent overall marked rally in oil prices."