Eurozone industrial output

Data from Eurostat showed that Eurozone industrial production increased by a greater than forecast 2.1% in January across the 19-member euro area, reversing negative growth from December and November (1).

It is the highest monthly rise since September 2009, and was significantly above economist’s expectations. Economists had forecast a 1.7% monthly growth rate (2). The strongest performance came from Ireland, which recorded a monthly growth rate of 12.7%.

Eurostat also revised the December figures, which showed a monthly output fall of only 0.5%, instead of the 1.0% decrease previously estimated (2).

On an annual basis, industrial production in the single currency zone increased by 2.8%, the biggest annual rise since August 2011. (3)

Economists do not forecast the performance continuing. Factory orders data from Germany has been weak, while surveys of purchasing managers have pointed to a slowdown in manufacturing.

Jack Allen from Capital Economics believed that “January’s strong rise in Eurozone industrial production was probably just a blip. Survey evidence suggests that the sector remains too weak to prevent the region’s economic recovery from slowing this year”.

Dominic Bryant from BNP Paribas also noted that “such an upbeat performance implies that there will be some payback in the next few months, particularly as industrial surveys have weakened of late. Production in Germany, which was one of the drivers of January’s strong performance, is now well above the level consistent with new orders, again suggesting a downward correction in the near term” (4).