Eurozone industrial output plunged by 3.5% in January compared with the previous month, the biggest decline since records began in 1990.

Compared with January 2008, the official Eurostat figures showed that industrial production across the 16 nations that share the euro fell 17.3%.

The drop came as factories cut output in light of a drop in demand for eurozone goods around the world.

Output from the 27 countries of the EU fell by 2.9% and 16.3% for the year.

‘Breathtakingly awful’

Analysts were taken aback at the scale of the drop.

“The eurozone industrial production data for January is breathtakingly awful, adding to the evidence that manufacturing activity has fallen off a mountain rather than a mere cliff,” said Howard Archer at Global Insight.

“It seems inevitable that eurozone manufacturers will continue to find life extremely difficult over the coming months as they are hit by deep slowdowns in both domestic demand and in key export markets,” he added.

Mr Archer said the recent spike in the euro is very bad news for eurozone manufacturers.

And the industrial output figures do not bode well for overall economic activity, analysts said.

“January’s appalling eurozone industrial production suggests that the economy continued to contract very sharply in the first quarter,” said Ben May at Capital Economics.

Analysts said the disappointing figures will increase pressure on the European Central Bank to cut interest rates, which currently stand at 2%.

Big drops

The biggest monthly drops came in Latvia (11.2%), Portugal (9.8%) and Germany (7.5%).

The only country to officially record a rise was Hungary, where output rose by 2.5%.

Ireland saw output rise by 6.7% but this was an estimate using old data.

Industrial output in the UK fell by 2.4%.

For the year as a whole, Estonia (26.8%), Latvia (23.9%) and Sweden (21.1%) saw the biggest falls.

German output fell by 19.1% the UK’s fell by 11.9%. (Via BBC)