January 14, 2014 / 10:14 AM / in 5 years

Euro zone output rebounds in Nov, adds to signs of economic recovery

BRUSSELS (Reuters) - Euro zone industrial production rose in November at its fastest pace in nearly four years, in an encouraging signal that the bloc’s economic recovery strengthened in the final quarter of 2013.

A steel slap is seen at a hot-rolled production at ThyssenKrupp Steel Europe AG in Duisburg November 29, 2013. REUTERS/Ina Fassbender

Industrial production across the euro zone jumped by a faster-than-expected 1.8 percent on the month, the biggest increase since May 2010 and rebounding after an upwardly revised 0.8 percent drop in October, the EU’s statistics office Eurostat said on Tuesday.

“Today’s industrial production figures make for encouraging reading and will fuel hopes of a sustained recovery in 2014,” said ING bank economist Martin van Vliet.

“However, with production still more than 10 percent below its pre-crisis peak there is still a long way to go before full recovery is achieved.”

The monthly rise was fuelled by a 3.0 jump in the output of capital goods and a 2.2 percent rise in the production of durable consumer goods, such as electronics and cars.

Economists in a Reuters poll had expected production to increase 1.4 percent on the month, against a previously reported 1.1 percent decline in October.

Compared with the same period of last year, industrial production rose 3.0 percent in November after an upwardly revised 0.5 percent rise in October.

The data points to a slight acceleration of the economic recovery of the 9.5 trillion euro economy in the final quarter of 2013 compared with the previous three months, when it nearly stalled because of a weak performance by France and Italy.

Production in the bloc’s largest economy, Germany, grew 2.4 percent on the month in November, its strongest growth since July 2011, while output in France, the euro zone’s second-largest economy, rose 1.4 percent.

That added to signs that the French economy rebounded in the final quarter of last year although weaknesses remain and President Francois Hollande is due to unveil a new reform agenda on Tuesday to give fresh impetus to the economy.

Ireland, which successfully exited an international bailout late last year, saw production surge 11.7 percent on the month, marking the strongest growth since January 2006.

The southern periphery, where the crisis erased tens of thousands of jobs, saw some improvement as Spain’s output returned to growth and Portugal’s production was up by 1.5 percent.

Analysts said that recent data showed an acceleration of economic activity, which could also be seen in a stabilizing labor market, where unemployment has been stuck at record high since spring 2013, but was not getting any worse.

“The growth improvement in place since spring 2013 is starting to spill over to the labor market, which is finally stabilizing and may soon show the first signs of moderate employment recovery,” said Marco Valli, Unicrecit’s chief euro zone economist.

Editing by Susan Fenton

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