Eurozone industrial output up modest 0.3 percent

AP News
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Posted: Nov 12, 2009 6:29 AM

Industrial production in the 16 countries that use the euro increased a modest 0.3 percent in September from the month before, reinforcing expectations that growth figures on Friday will show the recession in the single currency over.

The increase reported Thursday by the EU's statistical office Eurostat was slightly below market expectations for a 0.5 percent increase but means that industrial production over the July to September rose by 2.2 percent.

Though September's increase was way down on the 1.2 percent recorded in August, partly because of the end of some of the car scrappage programs across the region, it was the fifth straight monthly rise. That helped trim the annual rate of decline to 12.9 percent from 15.1 percent.

Industrial production is important for the eurozone as much of its future growth will hinge on exporting high value items like cars, particularly from Germany.

The September industrial figures will be incorporated into growth data out Friday. These are expected to show that the eurozone as a whole is officially out of recession.

Markets expect the eurozone to have grown around 0.5 percent in the third quarter from the previous three month period, even though some countries, such as Spain remain in recession. Figures earlier showed Spain contracted a further 0.3 percent in the July-September quarter.

Ben May, European economist at Capital Economics, said the industrial production data over the last three months was enough to boost gross domestic product in the eurozone by 0.7 percent.

"Encouragingly, the business surveys suggest that the recovery looks set to continue but given the strong euro and continued weakness of exports there are good reasons to remain cautious about the strength of the revival," said May.

"For now, though, these figures confirm that tomorrow's Q3 GDP release will show that the eurozone economy expanded at healthy clip," added May, who is pencilling in a 0.6 percent increase.

After the data the euro was little changed at $1.4950.

For the wider 27-country EU, which includes non-euro members such as Britain and Sweden, industrial production was up 0.2 percent on a monthly basis. Though down on the 0.8 percent recorded in August, it was also the fifth rise in a row.

On an annual basis, EU industrial production was 12.1 percent lower against 13.6 percent lower in the year to August.