Orders for goods produced by the world's largest exporter fell 8% between August and September.

It is the steepest fall since the reunification of west and east Germany in 1990.

Recession is looming for the German economy where output shrank during the second quarter.

A country is considered to be in recession when it has suffered two consecutive quarters of negative growth.

Rescue package

According to the economy ministry in Berlin, orders from outside Europe fell 11.4%, while domestic orders also dropped 4.3%.

"The fall in orders experienced since December 2007 is accelerating. As a result prospects for industrial production remain gloomy for the coming months", the ministry said in a statement.

The industrial data was released a day after the German government approved a package of measures aimed at pouring 50bn euros (£40bn) worth of investment into the economy in 2009 and 2010.

In October, parliament passed a 480bn euro rescue package in an effort to stabilise the country's troubled banking system.

A number of major German corporations, including carmakers Daimler and BMW, have issued severe profit warnings describing the economic conditions as 'challenging'.]]>
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Hit by slowing consumer spending and the threat of a painful recession, retail sales fell 0.2% from August, and by 1.6% compared to September 2007.

The biggest annual fall came in Spain, where spending has fallen 7.1% in the last twelve months.

The European Central Bank (ECB) is expected to cut interest rates on Thursday to boost consumer spending.

Figures also announced on Wednesday showed that eurozone service sector activity in October fell to a record low.

Negative territory

The fall in retail spending is less than many economists had expected.


The surveys continue to show record pessimism
Guillaume Meneut, Merrill Lynch

"There is a slightly less-than-expected fall, but a fall nonetheless. Eurozone growth and retail sales are well into negative territory," said Matthew Sharratt at Bank of America.

He added that the figures should "virtually guarantee" a 0.5% interest rate cut from the ECB.

Spending on food, drinks and tobacco remained unchanged, while spending on non-food products fell by 0.3% from August.

The fall on the previous month across all 27 countries in the EU was 0.1%, and 0.4% from September last year.

Of the 15 eurozone economies, Germany suffered the biggest drop in retail trade from August, falling 2.3%. Compared with September last year, Spain suffered the biggest drop, with trade falling 7.1%.

Belgium experienced the biggest growth in retail sales, with a 1.4% increase over August and a 4.2% increase over September 2007.

Service sector

Meanwhile, the Markit Eurozone Purchasing Managers' Index for the services sector has revealed that activity in the sector in October fell to its lowest level since the index was introduced 10 years ago.

The index slumped to 45.8, below both economists' forecasts and September's score of 48.4. Any score below 50 represents a contraction in the services sector.

On Monday, Markit announced that the purchasing index for the manufacturing sector fell to 41.1, also a record low.

"The surveys continue to show record pessimism," said Guillaume Meneut at Merrill Lynch.

The European Commission announced on Tuesday that the eurozone economy contracted by 0.2% in the second quarter, and that the EU economy would "grind to a standstill" in 2009.]]>