Eurozone industrial production rose more than expected in April, giving a good start to the second quarter and offering hope that industry will make strong contribution to economic growth despite the region's fiscal woes.
The seasonally adjusted industrial output rose 0.8% on a monthly basis in April, slightly slower than March's revised increase of 1.5%, figures released by Eurostat showed Monday. But, production grew more than the expected 0.6% rise.
On an annual basis, industrial production rose 9.5%, the biggest increase since the series started in 1991. That was also above the expected growth of 8.6%. It followed a revised 7.7% increase recorded in April.
"April's Eurozone industrial production figures suggest that the recovery in the sector continues at a decent pace, despite the fiscal crisis in the region," said Jonathan Loynes at Capital Economics. The economist noted that today's figure will give a solid start to the second quarter and underlines expectations that industry will lead growth. However, Loynes expressed doubt on whether the recovery in the euro area industrial sector will help the weakest economies in the region to cope with the coming fiscal squeeze.
Details of data showed that production of intermediate goods grew by 2.2% month-on-month and that of capital goods rose by 1.1%. Durable consumer goods output fell by 0.1% and production of energy declined by 0.9%. Production of non-durable consumer goods dropped by 1.2%.
Eurozone industrial sector is benefiting from recent improvement in global economic activity and the weak euro. "The manufacturing sector has been the leading light of the Eurozone economy so far in 2010, benefiting from improved domestic and, especially, export demand as well as inventory rebuilding," IHS Global Insight economist Howard Archer said.
However, the recent weakening in the Eurozone manufacturing sector as suggested by the purchasing managers' index indicates that the Eurozone debt crisis has started denting on economic activity. The index in May fell to a three-month low as output and new order growth slowed sharply.
Industrial production in EU27 rose at a slower pace of 0.5% month-on-month compared with 1.4% increase in March. Among the member states for which data were available, industrial production rose in twelve and fell in nine. The highest increases were registered in Lithuania, Estonia and Denmark, while Ireland, Portugal and Greece recorded largest decreases. On an annual basis, production in EU27 grew 7.8%.
News are provided by InstaForex.