"The ECB is reluctant to use the remaining room to maneuver"
- David Mackie, an economist at JP Morgan
Activity of manufacturers, mines and utilities in the 17-nation currency bloc fell more than initially was expected at the start of 2013, the EU's statistics office Eurostat said on Wednesday. Region's industrial production plunged 0.4% in January from December, below analysts' expectations, who called for a 0.1% fall. Factory output, two-thirds of which are generated by Germany, France and Italy, tumbled by 1.3% on an annual basis in January. The latest data are reflecting how few cars, televisions and other manufactured goods like refrigerators Europeans are purchasing at a time of record high unemployment. The poor state of manufacturing is also adding to concerns that the Eurozone economy is not on the path of recovery yet.
"The ECB is reluctant to use the remaining room to maneuver. Cuts in the main policy rate are being kept for an even rainier day," David Mackie, an economist at JP Morgan, wrote in a research note. "We believe that the ECB should respond to this macro outlook."
"It should be noted that the survey was conducted during the first half of February and, therefore, does not reflect the recent political uncertainty generated by the parliamentary elections," Anatoli Annenkov, an economist with Societe Generale Global Economics in London, said.
© Dukascopy Bank SA