Global economic indicators continue to deteriorate

Thursday's economic data underlined how sharply the global economy is deteriorating.

In the US, Bloomberg reports that durable goods orders and new home sales were down in December.

Orders for goods designed to last several years fell in December for a fifth month, the longest slide since comparable data began in 1992, the Commerce Department said today in Washington. Sales of new homes fell to an annual pace of 331,000, a rate that would take more than a year to clear the glut of unsold properties...

Orders for long-lasting goods dropped 2.6 percent last month, exceeding the 2 percent decrease foreseen by economists surveyed, the Commerce report showed.

For the euro area, Bloomberg reports that sentiment deteriorated again in January.

European confidence in the economic outlook fell to the lowest on record in January as the region faces its worst recession since World War II, adding to arguments for the European Central Bank to cut interest rates further.

An index of executive and consumer sentiment dropped to 68.9 from a revised 70.4 in December, the European Commission in Brussels said today. That is the lowest since the index was first published in 1985. Euro-area capacity utilization fell to 75.2 percent, the lowest since 1990, in the current quarter, the report showed.

Meanwhile, Japan faces a severe recession, one that it may have entered even earlier than the US. From Reuters:

The Japanese economy is facing a severe recession amid the global economic downturn, the head of a government panel that decides dates of business cycles said.

The panel decided on Thursday that Japan likely slipped into recession in October 2007, ending the economy's longest expansion period since World War II.

"Looking forward, I think the current economic downturn will be very severe even after we have already been in one for the last 14 months," said panel chairman Hiroshi Yoshikawa, an economics professor at Tokyo University.

Indeed, a report released on Thursday showed that retail sales fell 2.7 percent in December. Today, another report showed that the Nomura/JMMA Japan Purchasing Managers Index fell to 29.6 in January from 30.8 in December.

Other reports today amplified the case that Japan is in deep recession. From Bloomberg:

Japan headed for its worst postwar recession in December as factory output slumped an unprecedented 9.6 percent, unemployment surged and households cut spending.

The drop in production eclipsed the previous record of 8.5 percent set only a month earlier, the Trade Ministry said today in Tokyo. The jobless rate soared to 4.4 percent from 3.9 percent, the biggest jump in 41 years...

Household spending slid 4.6 percent, a 10th month of declines, a separate report showed. Consumer prices excluding fresh food rose 0.2 percent in December from a year earlier, slowing from 1 percent in November.