LONDON: The world's major economies are faltering or shrinking, with Chinese factory output barely growing, powerful European manufacturing countries falling deeper into malaise and the US stuttering, surveys showed yesterday.

In Britain, manufacturing activity shrank at its fastest pace in three years last month as the global economic slowdown hit demand for its goods.

"It doesn't bode well for the second quarter," said Sian Fenner, global macroeconomist at Lloyds Banking Group. "There is a lot of heightened uncertainty and risk in the market in the euro area, and this is playing on manufacturers' minds.

"It could start feeding through to sentiment in the US, although at the moment it is holding up reasonably well, and there are worrying signs from China."

Data yesterday, however, added to signs the US recovery may also be faltering, deepening a stock market sell-off this week due largely to growing panic over the euro zone's debt crisis.

US manufacturing grew more slowly in May, hampered by weaker hiring and declining production. But a measure of new orders rose to a 13-month high, suggesting factory activity will pick up in June.

The Institute for Supply Management, a trade group of purchasing managers, said yesterday that its index of manufacturing activity fell to 53.5 in May, down from a reading of 54.8 in April. A reading above 50 indicates expansion.

Equities, the euro, sterling and growth-linked currencies all fell after the gloomy data, although most then showed some signs of recovery as traders began to shut up shop for the weekend.

Markit's Eurozone Manufacturing Purchasing Managers' Index (PMI) dropped to 45.1 in May from 45.9 in April, slightly above a preliminary reading but marking its lowest level since June 2009.

It has been below the 50 mark that divides growth from contraction for 10 months. Similarly the output index fell to 44.6 from April's 46.1, also the lowest since June 2009.

Earlier data from France and Germany, Europe's largest economy, showed their manufacturing sectors contracted at the fastest pace in nearly three years. It was only German strength that prevented the euro zone falling into recession in the first quarter.

Italy's factories contracted for the tenth straight month while in Spain the PMI fell below that of Greece's, and posted the lowest reading of all the countries surveyed.

The news in Britain, linked inexorably to the fortunes of the euro zone, was little better. The UK economy is mired in its second recession in two years and its PMI plunged to 45.9 last month, its lowest reading since May 2009 and the second-steepest fall in the survey's 20-year history.

The HSBC China manufacturing PMI, tracking smaller private sector firms, retreated to 48.4 from 49.3 in April - its seventh straight month below the 50-mark that demarcates expansion from contraction - with the employment sub-index falling to 48.1, its lowest level since March, 2009.