Falling demand for cars cut eurozone industrial new orders by more than expected in September from August, pointing to a deep industrial recession and further interest rate cuts by the European Central Bank. Orders in the 15-country currency area fell 3.9 percent month-on-month for a 1.1 percent year-on-year contraction, the European Union statistics office, Eurostat, said on Monday.
Economists polled by Reuters had expected orders to fall 3.0 percent monthly and 1.9 percent annually. The eurozone is in technical recession after output shrank for a second straight quarter in July-September, and economists see further decline.
"Coming after the August decline and what we know about the business confidence for October and November, it does point to a deep industrial recession, which will not be lost on the ECB," Holger Schmieding, economist at Bank of America, said. The bank cut rates by 50 basis points in both October and November to 3.25 percent as a sharply slowing economy eased wage pressures and triggered an oil price plunge, which is quickly bringing down inflation towards the ECB's target.
Industrial orders indicate the level of future industrial activity. The data only partly covers the period when the year-old global credit crunch turned into the worst crisis on financial markets since the 1930s in mid-September and October. The fall in orders came mainly because of a 5.1 percent month-on-month plunge in demand for metals and fabricated metal products as well as a 3.8 percent fall in the volatile demand for ships, planes and trains.