- Peter Vanden Houte, ING Bank
Industrial production in the Eurozone declined for a second consecutive month in June, a further sign that 18-country bloc's economic recovery weakened in the second quarter. In its report, Eurostat said that output in factories, mines and utilities dropped 0.3% from a month earlier, when the 1.1% drop was registered, and remained unchanged compared to the same period last year. Analysts, however, expected a 0.5% rebound. The Euro was impacted by the data release, as the currency lost as much as 0.16% versus the Greenback to trade at 1.3348. The ECB announced last week that it is ready to launch quantitative easing in the Euro zone should the outlook for the currency bloc deteriorate further. Eurostat will release its data of economic growth during the second quarter today. It is projected that the Euro bloc faced a second consecutive three-month period of slowing growth, with GDP having increased 0.1% in the Q1. Faltering demand and high unemployment rate across the European economy is reflected in low inflationary pressure, which threatens to drag the bloc into a deflationary spiral. Both periphery countries Spain and Portugal reported falling consumer prices earlier this week, with cost of living declining 0.3% and 0.7% on the year in July, respectively. Meanwhile, data from Europe's growth engine, Germany continue adding to fears as the nation's economy slowed in the Q2 amid uncertainty caused by geopolitical crises in Ukraine and the Middle East, while inflation fell 0.8% in July, the lowest since February 2010.
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