The eurozone economy continues to limp toward another recession as business activity stagnates, according to data released Thursday.

A key manufacturing index showed activity across the eurozone contracting for the seventh straight month in August. The Markit composite Purchasing Managers Index was virtually unchanged from July at 46.6. Any reading below 50 signals contraction.

Output declined in both the manufacturing and services sectors. And incoming new business orders fell for the 13th month in a row, though the pace was less sharp than in July, which showed a 3-year low for orders.

The data suggest the eurozone economy will fall back into recession during the the third quarter, according to Rob Dobson, senior economist at Markit.

Dobson said that the PMI numbers for July and August were consistent with a decline of between 0.5% and 0.6% in gross domestic product -- the broadest measure of economic growth.

And that's setting the region up for a recession, which economists define as two consecutive quarters of declining GDP.

The eurozone GDP fell 0.2% in the second quarter, according to Eurostat.

Hedge funds are betting on a disaster

Dobson said growth in larger euro area economies, such as Germany and France, is no longer sufficient to support activity across the 17-nation currency bloc.

"Hopes that German economic strength will aid recovery in the broader currency union were dealt a blow by its rate of economic contraction accelerating, and further signs that its export engine has slammed into reverse gear," said Dobson.

German Chancellor Angela Merkel and French President Francois Hollande are set to meet Thursday to discuss the situation in Greece.