Euro-area industrial production declined for a second month in April, led by a drop in Germany, adding to signs of a deepening economic slump.

Output in the 17-nation euro area slipped 0.8 per cent from March, when it decreased a revised 0.1 per cent, the European Union's statistics office in Luxembourg said today.

Economists had projected a drop of 1.2 per cent, the median of 28 estimates in a Bloomberg News survey showed. From a year earlier, production fell 2.3 per cent. European manufacturers are cutting spending and jobs as global growth weakens. China led a slowdown in manufacturing across Asia last month and European economic confidence slumped to the lowest in 2 1/2 years.

European Central Bank president Mario Draghi said on June 6 that risks to the economic outlook had increased and "a few" Governing Council members had called for an interest rate cut.

"The latest data clearly show that the euro-land economy is in free fall," Jan Amrit Poser, chief economist at Bank Sarasin in Zurich, said in an e-mailed note before today's report.

"If measures to counter this development are not put in hand soon, the euro land will slip into a deep recession."

The statistics office had previously reported a monthly decline of 0.3 per cent in March.

In the 27-nation EU, output fell 0.4 per cent in the month and 1.7 per cent in the year.

The single currency has shed 4.9 per cent against the dollar over the past three months, reaching a two-year low, after an inconclusive election in Greece raised the possibility of a euro breakup as Spain grappled with a deepening banking crisis.

The euro-region economy will probably shrink 0.1 per cent this year before expanding 1 per cent in 2013, the ECB said in its latest projections on June 6.

The bank left its benchmark interest rate at 1 percent, matching a record low.

Bloomberg