INDUSTRY in the Eurozone got off to a shaky start in the fourth quarter, as official statistics released yesterday revealed that production shrank between September and October.
Output shrank 1.1 per cent during the month, leaving growth at only 0.2 per cent in the 12 months since October last year.
Despite the end of the currency union’s recession during the second quarter of this year, industrial production still sits below levels seen in 2011 and 2012, and the sector is over 10 per cent smaller than it was at its 2007 peak.
German manufacturers saw the most robust growth of any country, with a 1.8 per cent boost, while the Italian industrial base also expanded by 0.5 per cent. The euro area’s other large economies, Spain and France, registered declines of 0.8 and 0.3 per cent respectively.
The monthly drop was driven particularly by energy production, which fell by four per cent, but consumer and capital goods also declined.
Only intermediate goods saw any production growth over the same period, with a 0.4 per cent expansion recorded.
Exploring the likely effect on the regional economy in the fourth quarter, Capital Economics’ Ben May commented: “October’s data suggest that industry may well act as a drag on GDP growth in the fourth quarter. Production would have to expand by 0.9 per cent in November and December just for the sector to stagnate over the period as a whole.”
According to Principal Global Investors, who released their outlook for 2014 yesterday, there is also little sign of the clouds breaking for the Eurozone in the near future: “Many of the fundamental problems we have seen in Europe will continue to be issues. Many economies in the EU struggle under the weight of too much debt, both public and private. The banking sectors still carry too much bad private sector debt.”