MADRID, Jan 2 (Reuters) - The Spanish manufacturing sector shrank at a record pace for the fourth month running in December due to a lack of new business as the country entered recession, the Markit Purchasing Managers Index showed on Friday.
The indicator fell to 28.5 from a previous low of 29.4 in November and marked the lowest level in the near 11-year history of the survey.
Around 43 percent of Spanish manufacturers in the PMI survey said they cut jobs in December to compensate for falling production, marking the highest level of layoffs in the series history and taking the employment indicator to a low of 29.4.
"The truly horrendous PMI data for December mean that Spanish manufacturing heads into the new year with little reason for optimism - 2009 is all set to be a very difficult year," said Markit economist Andrew Harker.
The data backs expectations Spain would enter recession before the end of 2008 and stay there for much, if not all, of 2009.
Spain has suffered the steepest slowdown of any large European economy as the collapse of its decade-long housing boom coincided with the global credit crunch.
Many analysts see Spain suffering more and longer than any other large, developed economy as it weans itself off foreign financing and house building.
Spanish unemployment is the highest in the European Union at around 13 percent and expected to near 20 percent in 2010.
December PMI data showed the second steepest contractions on record for new domestic and foreign orders, with cancellations from the United Kingdom, France and Germany
Jobs have now been cut in the Spanish manufacturing sector in 16 consecutive months.
(Reporting by Andrew Hay; editing by Stephen Nisbet)