(Recasts with economists' comments, background)
By Jan Strupczewski
BRUSSELS, Nov 24 (Reuters) - Falling demand for cars cut euro zone industrial new orders by more than expected in September from August, pointing to a deep industrial recession and further interest rate cuts by the European Central Bank.
Orders in the 15-country currency area fell 3.9 percent month-on-month for a 1.1 percent year-on-year contraction, the European Union statistics office, Eurostat, said on Monday.
Economists polled by Reuters had expected orders to fall 3.0 percent monthly and 1.9 percent annually. The euro zone is in technical recession after output shrank for a second straight quarter in July-September, and economists see further decline.
"Coming after the August decline and what we know about the business confidence for October and November, it does point to a deep industrial recession, which will not be lost on the ECB," Holger Schmieding, economist at Bank of America, said.
"We expect a 50 basis point cut in December, with a chance it could be 75 basis points," he said.
The bank cut rates by 50 basis points in both October and November to 3.25 percent as a sharply slowing economy eased wage pressures and triggered an oil price plunge, which is quickly bringing down inflation towards the ECB's target.
Industrial orders indicate the level of future industrial activity. The data only partly covers the period when the year-old global credit crunch turned into the worst crisis on financial markets since the 1930s in mid-September and October.
"The global financial crisis in the services sector has been transferred to the manufacturing sector obviously by credit constraint on manufacturers and also through the demand side in emerging markets," BNP Paribas economist Dominic Bryant said.
CARS IN TROUBLE
The fall in orders came mainly because of a 5.1 percent month-on-month plunge in demand for metals and fabricated metal products as well as a 3.8 percent fall in the volatile demand for ships, planes and trains.
The falling demand for metals is likely to stem mainly from production cutbacks among carmakers, as lower credit availability and the slowing economy sharply reduced consumer demand, economists said.
Car sales have fallen dramatically as the global financial crisis has gathered steam. Carmakers are frantically trying to keep up with the declines in the market by slashing costs and extending the usual plant idling over Christmas to save cash.
In western Europe, new car registrations in October plunged 15.5 percent to just over 1 million vehicles, dragged down by extremely poor results for the Peugeot, Opel, Renault and Toyota brands.
PSA Peugeot-Citroen SA, Europe's second-biggest carmaker after Volkswagen AG in terms of European sales, said last week it planned to cut 3,550 jobs in France.
German labour leaders at Daimler have said management planned to reduce output of its Mercedes-Benz luxury cars by far more than 80,000 units, cut the work week to 30 hours and offer severance packages, after calculating it had 5,800 more staff on its payroll than needed.
European auto makers have asked for 40 billion euros in soft loans in state aid to weather the downturn. (Reporting by Jan Strupczewski and Marcin Grajewski, editing by Dale Hudson)