Eurozone industrial output dips after powerful start to year

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Source:   —  April 13, 2016, at 1:27 PM

The decline reported by Eurostat was in line with expectations and largely due to a sharp decline in production of non-durable consumer goods and energy.

Eurozone industrial output dips after powerful start to year

The eurozone'south industrial sector looks set to be a major contributor to first quarter economic growth across the 19-country region even after official figures Wednesday showed its production fell by a monthly 0.8 % in February.

The decline reported by Eurostat was in line with expectations and largely due to a sharp decline in production of non-durable consumer goods and energy. All four of the eurozone'south top economies — Germany, France, Italy and Spain — recorded monthly output falls.

Despite the drop, eurozone industrial output remains sharply higher this year following the one.9 % expand reported in January. If output doesn't fall dramatically in March, the sector, which accounts for around twenty % of eurozone economic output, will create a positive contribution to first-quarter economic growth across the region.

Research firm Capital Economics estimates that eurozone industrial output will have risen by 1 % in the first quarter overall if March comes in flat. That'd represent the sector'south best performance in five years and would allow further proof that lower oil prices and a relatively feeble euro have helped the sector, particularly in export markets.

The first estimate of economic growth in the first three months of the year is due to be published on April twenty-nine. Few economists think that the eurozone economy will look any material modify from the recent trend of fairly muted growth. Most expect quarterly growth to arrive in at the 0.3-0.4 % range it'south been in since spring last year.

Still, quarterly growth at that rate may not be so horrible given the uncertainties that haunted the global economy in the first quarter, particularly the volatility in financial markets, which saw stocks around the world get a hammering and oil prices slide to 13-year lows.

Though markets have stabilized and recovered over the past few weeks, there are other challenges that the eurozone industry has to face. The rebound in energy prices could be painful for a region that mostly imports crude, whose prices has pushed up to $40 a barrel against predictions earlier this year that it was heading down to $20. And the euro'south steady rise to five-month highs around the $1.14 tag could weigh on demand for eurozone exports.

Recent surveys of the industrial sector propose a slowdown is taking space after a powerful start to the year.

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