Euro Zone Services and Manufacturing Sectors Contract at Sharper Pace in December

The euro-zone economy is continuing to slow as 2008 draws to a close, with fresh data showing that the contraction in manufacturing and services is deepening. Markit Economics, a market research firm, said recently that its preliminary Purchasing Managers Index for the euro-zone's manufacturing sector dropped to 34.5 in Dec., from 35.6 in Nov. The PMI for the services sector fell to 42.0 from 42.5. As a result, the composite PMI, a measure of private sector activity, fell to 38.3 from 38.9. A level above 50 signals expansion in activity, while a level below 50 signals a contraction. Markit Economics also reported a darkening outlook for the euro-zone economy, saying the decline in new orders was the steepest since the survey began. New orders have now fallen for 8 straight months. Employment declined for the sixth straight month in Dec. in response to falling demand, while manufacturing registered a new record pace of job losses, a rate far above that seen in services, Markit Economics said. Separately, European statistics agency Eurostat said number of people employed in the 15-nation euro zone fell for the first time on a quarterly basis in the 3rd-Q. Employment fell by 0.1% of the workforce, or 80,000 people, led by falls in Spain, Portugal and Finland. It was the first quarterly drop since Eurostat records began in 1995. ECB President Jean-Claude Trichet, in remarks released recently, said the ECB is offering no guidance on whether it will cut rates again in Jan. He noted the ECB has already trimmed its key interest rate by 1.75% points since October, to 2.5%, and is worried about being "trapped by nominal interest rates that are much too low." He did say, however, the ECB is considering cutting the rate it pays banks on overnight deposits in a further bid to stimulate bank-to-bank lending. Meanwhile, the Bank of England