The euro-zone's business climate deteriorated to its lowest level in nearly five and a half years last month but the pace of its decline slowed, the European Commission said yesterday.
The business climate index dropped to -1.23 from -1.20 in November, reaching the lowest level since July 1996.
Economists said the fall was disappointing, particularly after Tuesday's report of an unexpected pick-up in economic sentiment in the European Union and in the 12-nation euro zone suggested that the economic slowdown was ending and recovery might be near.
"The fact that the index fell is disappointing, adds to the question mark of how quickly the euro-zone economy will recover and adds to the pressure on the European Central Bank to cut rates in the first quarter," said Mr Jeremy Hawkins, chief economic adviser at the Bank of America in London.
Mr Nigel Anderson, euro economist at RBS Financial Markets, said the index was "a little bit worse than we were expecting but it was more or less stable". The latest fall was less than the steep drop of -0.58 seen in October, when the index hit -1.13 and the more modest decline of -0.07 in November.
The European Commission called the relative stabilisation in December encouraging. But it said it was still premature to conclude there was any clear sign of the future direction of the confidence of industrial firms across the euro area.
The news came as Germany reported that seasonally adjusted unemployment climbed a lower-than-expected 6,000 to 3.94 million in December, confirming unemployment rose every month last year.
