Eurozone growth stuck in first gear

The 9.5 trillion eurozone economy crawled out of an 18-month recession in the second quarter with a 0.3 per cent quarterly rise in GDP. Economists expect it to have expanded again in the third quarter, on which data is due today.

Industrial output in the 17-country bloc fell 0.5 per cent on the month, Eurostat data showed yesterday. Analysts polled by Reuters had expected a 0.3 per cent fall.

In year-on-year terms output rose 1.1 per cent in September after a revised 1.1 per cent fall in August.

The September figure marked the strongest jump in two years, although from a low base due to a big fall in September last year.

“We don’t think that today’s figures cast doubt over the recovery in Europe, but it certainly shows that growth remains stuck in first gear,” said Peter Vanden Houte, chief eurozone economist at ING.

“The weakness of the upturn means that not much is needed to stop it,” he added.

Unemployment in the euro-zone remains at record highs of 12.2 per cent or nearly 19.5 million people, fuelling concerns over how much household consumption can help exports and drive stronger growth.

Output of durable consumer goods such as cars and electronics was down by 2.6 percent on the month in September.