Industrial production has surged in the Eurozone, setting the scene for an increase in growth in the region.
Eurozone industrial production rose to 1.5 per cent in November, up from a meagre 0.1 per cent in October, according to the European Commission.
While industrial production figures can be volatile, the acceleration in industrial growth will raise hopes that GDP in the final quarter of 2016 will come in above the 0.3 per cent figure recorded in the third quarter.
Howard Archer, chief UK and Europe economist for IHS Markit, said: “It appears that the Eurozone manufacturing sector carried decent momentum into 2017, and they will be helped by the very competitive euro.”
The 3.2 per cent year-on-year rise in Eurozone industrial production was the highest since January 2016, as growth was driven by a massive 16.3 per cent monthly increase in Ireland’s production, while Denmark recorded growth of 4.6 per cent.
Policymakers at the European Central Bank (ECB) will be heartened by the sign of continued recovery in the Eurozone economy. However, as the latest minutes from the ECB’s interest rate-setting Governing Council reveal, political risks still loom large on European policymakers’ agendas.
Elections in France, the Netherlands and Germany all offer a chance for populist – and resolutely anti-euro – parties to make significant electoral gains.
Paul Sirani, chief market analyst at Xtrade, said: “Whilst the Eurozone’s economy outlook is certainly gaining momentum, there look to be a number of hurdles on the horizon. Uncertainty and populist sentiment could fragment Europe’s political landscape in the coming months, and its wider impact on the economy is expected to be damaging.”