Eurozone industrial output fell more than expected in December, data showed yesterday, but probably not by enough to have stopped economic growth from picking up slightly in the last three months of the year.
Industrial output in the 17 countries sharing the euro in December fell 0.7 per cent on the month after a downwardly revised 1.6 per cent rise in November, Eurostat, the EU statistics agency, said. Analysts polled by Reuters expected only a 0.3 per cent fall in December. But economists said that on average in the last three months of 2013 eurozone industrial production was 0.3 per cent higher quarter-on-quarter than in the previous three months.
This meant that eurozone gross domestic product growth – to be reported in an initial reading on Friday – was likely to have picked up to 0.2 per cent quarter-on-quarter from 0.1 per cent in the previous three months.
“Today’s disappointing industrial production has no impact on our eurozone growth forecasts,” said Marco Valli, chief eurozone economist at UniCredit, who forecast 0.2 per cent quarterly growth in fourth quarter eurozone GDP.
The production decrease was driven mainly by a 2.1 per cent fall in output of energy and capital goods, with production of non-durable consumer goods down 0.1 per cent against November.
“Some of the weakness was probably due to the soft winter weather, pushing down energy production by 2.1 per cent,” said Peter Vanden Houte, an analyst with ING.
The growth weakness was likely to add to arguments for the European Central Bank to loosen monetary policy further next month, given inflation, at 0.8 per cent year-on-year in January, was well below its target of below-but-close-to two per cent.
“Despite much better sentiment, economic growth in the euro area in autumn was thus probably only slightly stronger than in summer. This supports our expectation that the ECB will take further expansionary measures, probably as early as March,” said Christoph Weil, economist at Commerzbank.
Compared with the same period of last year, industrial production rose 0.5 per cent in December after a downwardly revised 2.8 per cent rise in November. But analysts had expected a 1.8 per cent expansion year-on-year.
Only three out of 17 countries sharing the euro saw industrial production rising in December.