THE EUROZONE’S industry recorded its first annual growth in production since late 2011 yesterday, boosting optimism that the region may have exited recession in the second quarter.
Industrial production rose by 0.3 per cent between June 2012 and June 2013, another positive signal to analysts, many of who now expect data released today to show that the euro area’s economy has stopped contracting.
Germany recorded one of the currency union’s stronger increases in production, with a rise of 2.4 per cent over the 12 month period. Spain and Italy saw declines of 1.9 and 2.1 per cent respectively, while Greek industry saw a marginal but welcome 0.5 per cent increase through the year.
On the prospects for economic growth, Berenberg’s Christian Schulz commented: “The Eurozone’s recession ended when the snow melted last Easter. After six quarters of decline, output probably expanded modestly in the second quarter and will gain further momentum in the second half of the year”.
Capital Economics’ Ben May concurred with the idea that the recession in Europe’s currency union has already come to an end: “GDP probably posted a small rise of about 0.2 per cent”. However, he added a note of caution: “We doubt that this will mark the start of a strong and sustained recovery”.
The Zew indicator of German economic sentiment, which was announced yesterday, also suggested an improvement for the European economy. August’s survey was the most positive assessment of Germany’s current economic situation by firms in just over a year.
Howard Archer, chief European economist at IHS Global Insight, highlighted the importance of the country as the euro area’s economic engine: “It should be noted that June’s marked rise in Eurozone industrial production was substantially due to a 2.5 per cent month-on-month jump in German output”.