Industrial production starts to recover in euro zone

PUBLISHED : Wednesday, 14 August, 2013, 12:00am
UPDATED : Wednesday, 14 August, 2013, 5:38am

Industrial output in the 17-country euro zone bounced back sharply in June, official data showed yesterday, another sign the single-currency bloc is finally edging out of recession.

With overall growth figures for the second quarter due today expected to show a switch out of recession, euro-zone industrial production in June jumped 0.7 per cent from May, when it fell 0.2 per cent month on month.

Compared with June last year, output gained 0.3 per cent, the Eurostat statistics agency said.

The figures are the latest to suggest the euro zone is turning the corner, with retail sales, business and consumer confidence and now industrial output all encouraging after months in the doldrums.

The report coincided with news from Germany, Europe's powerhouse, where the closely watched investor confidence index calculated by the ZEW economic institute rose 5.7 points to 42 points this month.

Ben May of Capital Economics said the industrial output and ZEW figures "provide further signs that the euro zone has emerged from recession".

Second-quarter euro-zone overall growth should therefore come in at 0.2 per cent, reversing the 0.2 per cent contraction in the first quarter, May said.

Howard Archer of IHS Global Insight said the industrial output figures confirmed his forecast of a return to euro-zone growth in the second quarter. However, like many analysts, Archer remained cautious about the outlook.

"While encouraging, it should be noted that June's marked rise … was substantially due to" Germany's gain of 2.5 per cent, he said.

Archer warned of continued headwinds - a tight fiscal stance, high unemployment, lack of credit and muted global growth - which will keep the economy under pressure.

Eurostat said that for the full European Union, June output rose 0.9 per cent from May, when it dropped 0.4 per cent.

On a monthly comparison, the biggest increases were reported in Ireland, up 8.7 per cent, followed by Romania, up 5.7 per cent, and Poland, up 3.1 per cent.

Bailed-out Greece gained 2.5 per cent, reinforcing growth data on Monday which showed the pace of its economic downturn easing, if still very damaging.

The biggest losers in June were the Netherlands, down 4.1 per cent, Portugal, off 2.8 per cent, and France, down 1.5 per cent.

On an annual comparison, Romania led the gainers, up 9.6 per cent, followed by Poland, up 5.3 per cent and Estonia, up 4.7 per cent. The largest loser was Finland, down 5.9 per cent.