Eurozone output falling as it lurches towards recession
Output at factories in the Eurozone unexpectedly fell in March, the latest in a series of disappointing numbers signalling that the bloc’s recession may not be as mild as policymakers hope.
Industrial production in the 17 countries sharing the euro fell 0.3 per cent in March from February, the EU’s statistics office Eurostat said. Economists polled by Reuters had expected a 0.4 percent increase in the month.
The figures stood in contrast with German data last week showing output in the Eurozone’s largest economy up 2.8 per cent for the month, underlying the division in the bloc.
Many economists expect Eurostat to show that the euro zone entered its second recession in just three years at the end of March, with households suffering the effects of austerity programmes aimed at cutting debt and deficits.
“Industrial production is a timely reminder that first-quarter GDP will likely show a contraction,” said Martin van Vliet, an economist at ING. “With the fiscal squeeze unlikely to ease soon and the debt crisis flaring up again, any upturn in industrial activity later this year will likely be modest.”
European officials have repeatedly said the slump will be mild, with a recovery in the second half of this year. But the strong economic data seen in January has unexpectedly faded and business surveys point to a deeper downturn, with the drag coming from a debt-laden south, epitomized by Greece, Spain and Italy.
Economists polled by Reuters last week estimated the euro zone economy shrank 0.2 per cent in the first quarter, after shrinking 0.3 per cent in the fourth quarter of last year.