Euro zone industrial output unexpectedly fell in June against May, data showed today, but rising optimism in business surveys and upbeat German orders data pointed to a rise in production in the third quarter.
Industrial production in the 16-country euro area fell 0.6 per cent on the month and 17 per cent year-on-year, the European Union's statistics office said.
Economists polled by Reuters had forecast a 0.3 per cent monthly gain and a 16 per cent annual fall.
“The figures were a little bit disappointing, but we are sure we have seen the bottom in June and there will be increases in production in the coming months,” said Christoph Weil, economist at Commerzbank.
Economists said output shrank 3 per cent quarter-on-quarter in April-June, clearly slowing the pace of contraction from the 7.5 per cent drop in the first three months of the year.
“Business surveys and the recent buoyant German industrial orders data suggest that the euro zone industrial sector should start to grow again in the third quarter,” said Nick Kounis, economist at Fortis Bank.
The improving trend reflects that we have passed the most aggressive phase of de-stocking, while global demand is picking up again,” he said.
The monthly and annual fall in June was led by steep declines in the production of durable consumer goods, pointing to weakness of household demand.
In France, the second biggest, production rose 0.5 per cent on the month, but in third biggest Italy, it fell 1.2 per cent.
Eurostat revised upwards the monthly production data for May to a rise of 0.6 per cent from the previously reported 0.5 per cent, but also to a year-on-year drop of 17.6 per cent versus the initially reported 17 per cent decline.
“Base effects will be very favourable indeed over the second half of the year, particularly from September, so the year-on- year rate will fly, even if the month-on-month flow of data is not so impressive,” said Ken Wattret, economist at BNP Paribas.
Reuters