Eurozone industrial output bounces back sharply

The Euro logo pictured outside European Central Bank in Frankfurt, central Germany London – Arab Today A sharp rebound in eurozone industrial output for June is another pointer that the single currency bloc is finally edging out of a record 18-month recession, official data showed on Tuesday .
Industrial production in the 17-nation eurozone jumped 0.7 percent from the level in May when it fell 0.2 percent, bolstering hopes that overall economic growth figures due on Wednesday will show a long-awaited switch out of recession.
Compared with industrial output in June 2012, the eurozone gained 0.3 percent, the Eurostat statistics agency said.
The figures are the latest to suggest the eurozone 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 positive news from Germany, Europe's powerhouse economy, where the closely watched investor confidence index calculated by the ZEW economic institute rose by 5.7 points to 42.0 points in August.
That was the best reading since March and also beat analyst forecasts for an increase to about 40 points.
"First signs of an end to the recession in important eurozone countries may have contributed to the indicator's rise. Furthermore, the economic optimism is supported by robust domestic demand in Germany," ZEW said.
For the survey, ZEW questions analysts and institutional investors about their assessment of the economic situation in Germany, as well as their expectations for the coming months.
Ben May of Capital Economics said the industrial output and ZEW figures "provide further signs that the eurozone has emerged from recession."
Second quarter eurozone economic growth should therefore come in at 0.2 percent, reversing the 0.2 percent contraction in the first quarter, May said.
For Howard Archer of IHS Global Insight, the industrial output figures confirmed his forecast of a return to 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 percent, he said.
At the same time, 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.
Berenberg Bank economist Christian Schulz was similarly guarded but believes the recovery will gain strength.
"The eurozone recovery is proving increasingly resilient," Schulz said. "Downside tail risks remain but as growth returns ... the chances that the recovery can overcome potential setbacks improve, too."
Ranked second in the eurozone to Germany, France still struggled with a fall of 1.5 percent, much worse than the 0.3-percent drop posted for May.
Italy edged up 0.3 percent but Spain slipped 0.5 percent.
Non-euro Britain gained 1.1 percent, continuing a more positive set of figures.
Eurostat said that for the full 27-member European Union, June industrial output rose 0.9 percent from May when it dropped 0.4 percent and was up 0.4 percent year-on-year.
On a monthly comparison, the biggest increases were reported in Ireland, up 8.7 percent, followed by Romania 5.7 percent and Poland, 3.1 percent.
Twice bailed-out Greece gained 2.5 percent, reinforcing growth data 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 percent, with Portugal off 2.8 percent as France, ranked second only to Germany, dropped 1.5 percent.
On an annual comparison, Romania led the gainers, up 9.6 percent, followed by Poland on 5.3 percent and Estonia 4.7 percent.
The largest year-on-year loser was Finland, down 5.9 percent.
Source: AFP