European industrial output took a record plunge in February while car sales continued a yearlong slide in March, according to figures published Thursday suggesting the region's economy continues to contract, AP reported. Industrial production in February for the 16 nations that use the euro fell 18.4 percent from a year ago, the EU statistics office Eurostat said. The entire 27-nation European Union posted a drop of 17.5 percent over the same period. That is the steepest decline since statistics began in 1986 and shows that demand remains depressed _ and that the recession-hit euro-zone economy likely continued to shrink in the first quarter after contracting in the second, third and fourth quarters of 2008. European car sales fell 9 percent in March from a year ago despite government subsidies to car buyers that have buoyed German, French and Italian purchases, the European auto manufacturers' association ACEA said Thursday. Households are avoiding big-ticket items in recession-hit Europe as consumer confidence is at all-time lows amid worries about job losses. Fears about weaker spending have spread through the economy, affecting manufacturers across the region. Worst-hit was production of durable consumer goods and machinery and tools, Eurostat said. Economist Marco Valli at UniCredit said the figures «validate the view that the industrial recession deepened further in the first quarter.» Unicredit lowered its first quarter forecast for the euro economy to shrink by 1.7 percent, and Valli warned that the final figure could be even worse. Meanwhile, Eurostat also confirmed that the euro-zone's annual inflation rate in March was at a record low of 0.6 percent as four euro nations reported deflation, or a real fall in prices. Ireland saw prices drop 0.7 percent, Portugal was down 0.6 percent, Luxembourg by 0.3 percent fall and Spain declined 0.1 percent. Eurostat said tumbling prices for transport fuel and heating oil were behind the inflation plunge, overcoming high prices for natural gas, restaurants and cafes and electricity. European Central Bank President Jean-Claude Trichet has described falling prices as a boost to Europeans' purchasing power. But overall car sales continue to slide across Europe despite a turnaround in some markets. March was the eleventh month in a row of falling sales, dragging the first quarter of the year down 17 percent from the same period in 2008. ACEA said a 39.9 percent sales surge in Germany, the region's largest car market, failed to compensate for sharp drops in Britain _ down 30.5 percent _ and Spain _ down 38.7 percent. French sales were up 8 percent in March while Italy climbed only slightly, by 0.2 percent. Germany, France and Italy are trying to support their car makers by stoking sales with a 'crash a wreck, cash a check' program that gives buyers money if they scrap an old car for a more fuel-efficient model. Britain also plans to introduce cash incentives for car buyers. This has boosted sales in those countries so far this year, but analysts fear that buyers are merely bringing forward purchases and sales will be slow later this year even if the economy improves. EU consumer confidence surveys show that many people are shunning big purchases and are worried about rising unemployment. EU businesses say 4.5 million jobs could disappear this year. Only one car maker _ Italy's Fiat SpA _ saw sales grow in March, by 14.3 percent. All others saw sales slip. General Motors Corp. fell by 20.1 percent from a year ago, Toyota by 11.9 percent, Renault SA by 10.9 percent, Peugeot Citroen PSA by 9.1 percent and Ford Motor Co. by 7.7 percent. Europe's No. 1 seller Volkswagen AG declined a more modest 0.3 percent German luxury car makers were badly hit. BMW sales dropped 20.8 percent and Daimler, which makes high end Mercedes cars, posted a 14.6 percent slump. Some 1.5 million cars were sold across the European Union plus Switzerland and Norway in March compared to 1.6 million cars in March 2008.
