Manufacturing growth is slowing from China to Europe, creating a dilemma for central bankers considering higher interest rates to combat inflation.

China's factory index fell to the lowest level since February 2009, while in the 17-nation euro area, a gauge slipped to an 18-month low. German manufacturing expanded at the weakest pace in 17 months, while Italy, Ireland, Spain and Greece contracted. In the U.K. and India, output growth also slowed.

“There is a broad-based slowdown taking place in the manufacturing sector,” Silvio Peruzzo, an economist at Royal Bank of Scotland Plc in London, said by telephone. “But it's still too early to jump on the view that we're heading toward an environment where activity will be contracting.”