Boost as eurozone sprang a surprise rise in industrial output

INDUSTRIAL output from eurozone factories defied market expectations of a month-on-month decline and rose in April, data showed yesterday, but the pace of expansion was slowed by a drop in production of energy and durable consumer goods. Industrial production in the 17 countries using the single currency rose by 0.4 per cent on the month, after a nearly two-year high jump of 0.9 per cent in March, the data from the EU statistics agency Eurostat showed. Economists polled by Reuters had expected a 0.2 per cent fall.

The bloc’s economy remains crippled by the impact of the sovereign debt crisis as governments continue growth-slowing fiscal consolidation, millions of Europeans are out of jobs and small and medium-sized companies are struggling to get credit.

“While April industrial production data are relatively encouraging, the eurozone manufacturing sector is not yet out of the woods,” said Howard Archer, chief European economist at IHS Global Insight.

“Indeed, conditions remain far from easy for eurozone manufacturers.”

The pace of the bloc’s economic contraction slowed in the three months to March, compared to the previous quarter, but Europeans facing stressed labour markets remain reluctant to spend, preventing a more dynamic rebound.

The European Central Bank still expects a gradual recovery later in the year, but sees downside risks.

The ECB left interest rates unchanged at record lows last Thursday and slightly lowered its economic outlook for the euro area this year, saying the economy would shrink 0.6 per cent in 2013 but grow again by 1.1 per cent next year. Industrial production in April was influenced by a 1.5 per cent drop in energy output month-on-month, the first decline in four months, and a 2.7 per cent fall in the production of cars, electronics and other durable consumer goods.