Euro recovery lifted by strong factory growth

 
Tim Wallace
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SURGING industrial output in November gave the troubled Eurozone economies a shot in the arm yesterday.

The currency area has been struggling with weak output across all sectors since the financial crisis, but factory output jumped 1.8 per cent in November compared with October.

The sudden growth spurt more than reversed the 0.8 per cent contraction in the sector in October and the 0.2 per cent drop in September.

It is also the largest monthly jump in more than three and a half years.

Ireland recorded the steepest rise, a staggering 11.7 per cent leap, followed by 3.8 per cent in Malta and three per cent in France.

Each sub-sector recorded growth, led by a three per cent rise in capital goods and 2.2 per cent jump in durable consumer goods.

Struggling Spain recorded growth of one per cent while Italy’s came in at 0.3 per cent.

A handful of countries are still undergoing a contraction in the industrial sectors.

Output in Greece fell another 2.2 per cent in the month to November, while Lithuania’s sector shrank by 3.5 per cent.

However, economists do not believe this is the start of a strong, sustained recovery.

“The October-November average level of output is only 0.3 per cent above that observed during the third quarter; and so, barring another similarly strong reading in December (which seems unlikely to us), the sector will probably only make a most contribution to fourth quarter GDP growth,” said James Ashley from RBC Capital Markets.