European industrial output slumps

European industrial orders fell sharply in December, official EU figures have shown, as factories reported a steep drop in demand for their goods.

• New industrial orders in eurozone nations slumped by 5.2% from November and plummeted 22.3% compared with a year earlier, according to Eurostat.
• The fifth consecutive monthly drop was partly driven by fewer orders for machinery and electronic equipment.
• It came as German corporate confidence fell to its lowest since 1990.
• The Ifo economic research institute said its German business climate index, based on a monthly poll of about 7,000 firms, fell to 82.6 in February from 83.0 in January, on deepening gloom about the state of the global economy.
• “Hopes that the battered economy might be about to turn around took another backlash today,” said Carsten Brzeski, an economist at ING Financial Markets, adding that the European Central Bank (ECB) would be forced to respond to the latest decline in sentiment.
• EU nations are looking for co-ordinated action to tackle the economic crisis, and the weak German corporate sentiment could raise pressure on the European Central Bank to make further interest rate cuts to support eurozone economies.
• However, the efforts to work in unity have met with allegations of protectionism, while governments have had differences over economic stimulus packages.
• All major industry sectors reported drops in demand, Eurostat said.
• The figures relate to the 15 nations which used the euro in December. Slovakia became the bloc’s 16th member in January.