FT.com / Brussels – Eurozone orders signal tough year ahead
October’s orders were 15.1 per cent lower than a year before – the sharpest drop since at least 1995, when comparable records began. Leading the decline, motor vehicle orders were more than 30 per cent lower in October than a year before, Eurostat said.
With orders data proving early warning signals of likely trends in economic activities, economists have become increasingly gloomy about 2009.
Holger Schmieding, European economist at Bank of America, said orders had tumbled in sectors typically hit early in a down cycle, including basic metal products, machinery and equipment as well as cars.
Industrial orders were likely to have seen further sharp falls in November and December as the financial market crisis fed into the real economy “with force”, Mr Schmieding said.
Eurozone gross domestic product could have dropped by more than 1 per cent in the fourth quarter with a similar decline likely at the start of next year, he added.
The orders data “if anything suggest downside risks to those forecasts”.
German consumer confidence remains relatively robust, with the Nuremberg-based GfK market research organisation reporting on Monday that its consumer climate index pointed to the mood remaining stable in the new year.
But the Kiel Institute for the World Economy, based in north Germany, warned that the “extraordinary rapid decline” in economic activity indicators across industrial countries was “only comparable to those in the deepest recessions on record in postwar history”.
It forecast that Germany’s economy would contract by 2.7 per cent in 2009, and the eurozone by the same amount, before returning to modest growth in the following year.