European factory orders slump, German confidence at 26-year low

Figures from Eurostat have revealed a sharp fall in European industrial orders for the month of December.

The official figures show that new industrial new orders in the euro zone fell 5.2% compared with November and 22.3% compared with December 2007.

The drop was attributed, in part, to fewer orders for machinery and electronic equipment.

According to Howard Archer, chief European economist at IHS Global Insight, “The further very sharp fall in industrial orders in December highlights the current dismal state of the euro zone manufacturing sector and reinforces belief that the region is facing further deep contraction in the first half of 2009.”

In December, there were 15 nations which used the euro. Slovakia became the bloc’s 16th member on 1 January.

The news came on the same day that the Ifo economic research institute revealed that German business confidence fell to a 26-year low as worries grow about the global economy.

The institute, based in Munich said its climate index, which is based on a monthly poll of 7,000 firms, fell from 83.0 in January to 82.6 in February - this represents the worst reading since November 1982.

Germany, and the euro zone as a whole, both entered recession in November last year.

EU nations are looking for co-ordinated action to get a grip on the economic crisis. Analysts believe that today’s figures could put pressure on the European Central Bank to lower interest rates further.

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