- Martin van Vliet, an analyst at ING Bank
Industrial production in the Euro zone increase twice as much as anticipated in July, halting a two month streak of contraction and fuelling hopes that the region may start growing again in the third quarter, after recording no growth in the previous three months. Output from factories, energy companies and other utilities across the Euro zone grew 1.0% on a monthly and seasonally adjusted basis, following the 0.3% decline in June and overshooting analysts' expectations for a 0.7% pickup. On an annual basis, the industrial output increased as much as 2.2% in July, up from the upwardly revised 0.2% growth registered in the prior month and versus the market consensus for a 1.4% growth. Production remained above contraction territory for the eleventh straight month. The jump in output was led by manufacturers of capital goods, which may suggest that investment spending is set to rise, a welcome sign after years of caution on the part of European businesses. Energy production declined, as did the manufacturing of durable consumer goods, an indication that households remain wary of making large purchases in the face of an jobless rate that remains close to its record high.
However, employment and industrial production remain well below their pre-crisis levels and there is no indication that the Euro zone's recovery is set to accelerate to a pace that would quickly add large numbers of new jobs or end a long period of low inflation.
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