European manufacturing and services struggle

In December, European manufacturing and services have receded at the fastest pace in over 10 years which is a further indication that the recession is far deeper than expected.

According to an index based on both industries, a 1.6 point drop has been experienced in the period from 38.9 points in November

Within the euro region, payrolls have fallen in the last two quarters for the first time in over 10 years and it is the continued deterioration of the labour market which has eroded consumer confidence further.

The threat of the continued and deepening recession has placed even more pressure on the European Central Bank to take further action and cut interest rates in January to continue easing monetary policy and reduce the impact of the economic slowdown.

The manufacturing index produced by Markit has revealed that the outlook does look bleak as the index dropped by 0.9 amid more factories admitting to having to reduce the working week.

This has been made worse by the news this week that European car sales are down by 26 percent in a period where consumer and executive confidence are at their lowest in over 15 years, which is another indication of the impact on the recession.

Daimler AG has announced they will be reducing working hours whilst PSA Peugeot Citroen has revealed that they will be axing 3,500 jobs.

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