Eurozone factory output rebounded in October

Industrial orders in the eurozone rebounded from a slump in September to rise 1.4 per cent month-on-month in October, generating a 14.8 per cent year-on-year gain.

The monthly rise in orders was largely due to a five per cent jump in demand for durable consumer goods, the European Union's statistics office Eurostat said.

In a separate Eurostat dataset, surging energy costs were shown to have driven up eurozone producer prices in November, a sign that rising inflationary pressures could hurt the region’s manufacturing recovery.

October's rebound in new factory orders is evidence of a heartening recovery in manufacturing gaining traction towards the end of last year.

“The underlying strength of industrial orders was evident in the fact that they rose by 2.4 per cent in the three months to October compared to the three months to July. It is useful to look at the underlying trend as industrial orders are notoriously volatile on a monthly basis,” said Howard Archer, chief economist at consultancy IHS Global Insight.

Excluding volatile orders for ships, planes and trains, orders rose 0.9 per cent on the month for a 14.4 per cent annual gain.

Many eurozone countries saw improvements in industrial new orders: Germany’s were up 1.4 per cent and France rose 2.3 per cent.

But peripheral economies showed weakening order books – Spain’s fell 0.3 per cent while Italy’s shed 1.4 per cent.

Prices at factory gates in the 16 countries using the euro in November were however 0.3 per cent higher than in October and 4.5 per cent higher year-on-year.

The monthly growth of producer prices, which translate into consumer price increases unless absorbed by intermediaries and retailers, was driven mainly by a 0.9 per cent increase in the costs of energy.

The rise was broadly as experts had expected.

“The ECB will obviously keep a very close eye on whether or not second-round inflationary effects are increasingly emerging, but for the time being at least we expect ECB policymakers to remain relatively relaxed about the overall Eurozone inflationary picture given the limiting impact of still significant output gaps in most countries and high unemployment,” Archer said.