Eurozone industrial orders fell by more than expected in July and consumer morale worsened to a two-year low in September, adding to concerns that Europe maybe sliding toward recession. New orders in the 17 countries using the euro fell 2.1 percent compared to June, deeper than the 1.1 percent fall forecast by a Reuters poll of economists, the European Union's statistics office Eurostat said on Thursday.
The data came as separate surveys earlier on Thursday showed the eurozone's private sector contracted in September for the first time in two years as fallout from Europe's debt crisis sucks away business confidence. "We are heading towards a clear slowdown in growth in the second half, especially if you combine this data with the PMIs," said Carsten Brzeski, an economist at ING, referring to the Flash Markit Eurozone Services Purchasing Managers' Index.
"It shows that demand for eurozone products is weakening and we are on the brink of a recession," he said. Industrial orders rose 8.4 percent in July versus a year ago, but again disappointed economists who had expected a 10.6 percent increase. French industry fell back sharply in July and orders tumbled 11.2 percent compared to June, the largest slide in the single currency bloc, while in Germany, Europe's top economy and manufacturing heartland, orders slid 3 percent from June.
"The situation is deteriorating and we will see an industrial recession by the end of the year," said Marco Valli, Unicredit's chief euro zone economist. The horizon was also darkened by weakening consumer confidence in September in the single currency bloc. Shoppers' morale fell to -18.9 this month from -16.5 in August, the European Commission said in a flash estimate, similar to the -19.0 level registered in September 2009.
The EU's Economic and Monetary Affairs Commissioner Olli Rehn, speaking in Washington on Thursday, reiterated his position that Europe is not heading for another recession following the 2008 global financial crisis. But the European Central Bank is perceived to be under pressure to reverse its recent monetary policy tightening and cut rates.