LONDON—The prospect of Europe falling back into recession came a step closer Thursday following the latest batch of dire economic data.

Financial data company Markit said its preliminary survey of purchasing managers in the 17-nation euro zone fell into contraction this month, with a reading of 49.2—below the 50 threshold that denotes expansion. That is the first monthly decline in activity since the euro zone climbed out of recession in the third quarter of 2009.

The figures indicate Europe's private sector is retrenching at the same time as governments in many countries are slashing their expenditures in a bid to ...