World Economy

EU Industrial Output Recovers

EU Industrial Output RecoversEU Industrial Output Recovers

Eurozone industrial production recovered at a faster than expected pace in October on durable consumer goods output, official data showed Monday.

Industrial output advanced 0.6% on a monthly basis in October, reversing a 0.3% fall in September, Eurostat reported. This was the first increase in three months and exceeded a 0.3% rise forecast by economists, RTTnews reported.

Even at this early stage, data indicates that industry may have contributed more to GDP growth in the fourth quarter than it did in the third quarter, Jessica Hinds at Capital Economics, said.

Nonetheless, the big picture is still that GDP growth remains far too slow to bring inflation swiftly back to the European Central Bank’s target of just below 2%, the economist added.

According to ECB staff projections, inflation will be at 0.1% this year and 1.6% in 2016. The bank had extended its €1.1 trillion ($1.21 trillion) quantitative easing until March 2017 to lift inflation and cushion growth.

IHS Global Insight Economist Howard Archer said today’s data reinforces the belief that Eurozone GDP growth will pick up to at least 0.4% in the fourth quarter from 0.3% in the third quarter.

The recovery was driven by a 1.4% rise in capital goods output and a 1.8% increase in durable consumer goods. Production of energy and non-durable consumer goods came in at 0.6% and 0.4$, respectively.

On a yearly basis, growth in industrial production improved to 1.9% from revised 1.3% in September. Economists had forecast the annual growth to ease to 1.4% from September’s originally estimated rate of 1.7%.

In the EU28, industrial production climbed 0.5% from September and by 2.4% from the prior year.