Output from euro zone factories continued its steep fall in autumn this year, underscoring the feeble domestic demand that risks prolonging the bloc's recession.

Industrial production in the 17 countries sharing the euro fell 1.4 percent in October after falling 2.3 percent in September, the EU's statistics office Eurostat said on Wednesday, much worse than the 0.2 percent growth expected by economists in a Reuters poll.

Eurostat revised September's reading from an earlier figure of a 2.5 percent fall in industrial production.

The disappointing production erases factories' surprising resilience over the European summer, when industry posted two months of moderate gains, supporting forecasts of a third quarterly contraction in the euro zone's economy in October-to-December period.

After three years of a debt crisis that has driven unemployment to a record level and pushed governments to cut spending, the economy is caught in a spiral where households are not spending and companies are not selling, forced to cut staff that further weakens consumption.

"Domestic demand will only turn around when uncertainty among the companies about the fate of the euro has been dispelled, prompting them to increase investment again," Ralph Solveen, an economist at Commerzbank, wrote in a research note.

Germany, France and Italy, which make up two-thirds of the euro zone's industrial production, all saw their factory output contract for the second consecutive month in October, with Germany, the euro zone's biggest economy, falling the most.

At the euro zone level, only production of consumer goods such as food and cosmetics rose in October, with all other sectors falling. Output of cars, electronics and furniture fell almost 4 percent.

Automakers Peugeot , Ford and General Motors have announced a total of 16,500 job cuts over the past two months in Europe, while other companies ranging from Spanish airline Iberia to telecoms group Alcatel Lucent have also said they will cut their workforce.

(Reporting by Robin Emmott; editing by Rex Merrifield)