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Euro Zone Factory Output Rallied in November Euro Zone Factory Output Rallied in November
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PARIS — Factories in the euro zone ramped up output in November after two months of decline, in the latest sign that economic growth in the region may be picking up steam. PARIS — Factories in the euro zone ramped up output in November after two months of decline, according to data released Tuesday, the latest sign that economic growth in the region might be picking up steam.
Industrial production in the euro zone rose 1.8 percent in November compared with October, Eurostat, the statistical agency of the European Union reported. For the whole European Union, November production rose 1.5 percent from October. Both areas reported a 3.0 percent increase from a year earlier. Industrial production rose 1.8 percent from October, data from Eurostat showed, significantly better than what economists had expected. It was all the more remarkable considering that Eurostat, the statistical agency of the European Union, also revised the data upward for October to show a smaller monthly decline.
Ireland, which has just exited its bailout, led all European Union nations with an 11.7 percent gain in November, bouncing back from a 6.3 percent decline in the previous month. For the whole European Union, production rose 1.5 percent in November from October. Both areas reported a 3 percent increase from a year earlier.
The euro zone gain was significantly better than what economists surveyed by Reuters had been expecting, and was all the more remarkable considering that Eurostat revised upward the previously reported data for October, to show a smaller decline from September. The data “provide some hope that the economy might have regained a bit of momentum towards the end of last year,” said Jonathan Loynes, chief European economist at Capital Economics in London. But he cautioned that, considering the weak output of previous months, production was still not much higher than it was in June, adding, “it would be wrong to get carried away.”
The data “provide some hope that the economy might have regained a bit of momentum towards the end of last year,” said Jonathan Loynes, chief European economist at Capital Economics in London. But he cautioned that, considering weak data in the previous months, “production is still only 0.8 percent higher than it was back in June,” adding, “it would be wrong to get carried away.” Production of capital goods like machine tools and computers led all sectors, followed by rising output of consumer durables, which include washing machines and furniture, the data showed.
That was consistent with the view of Mario Draghi, the European Central Bank president, who said last week: “The recovery is there, but it’s fragile.” Mr. Draghi noted that confidence was still weak, and with unemployment at 12.1 percent, the labor market remains in a deep funk. Ireland, which has just exited its bailout program, led all European Union nations with an 11.7 percent gain in November, bouncing back from a 6.3 percent decline in the previous month. Mr. Loynes said that the Irish data were too volatile on a monthly basis to make firm forecasts, but that “in the broader picture it’s another indication that things are improving in Ireland.”
The Eurostat report Tuesday showed production of capital goods like machine tools and computers rose 3.0 percent, leading all sectors, followed by a 2.2 percent rise in consumer durables, which includes washing machines and furniture. Industrial production, excluding construction, makes up about a fifth of the output component of the region’s gross domestic product, so an uptick in that area bodes well for growth. Similar recent data, in the form of purchasing manager surveys by a data analytics firm, Markit Economics, showed manufacturing output rising at the fastest pace since the spring of 2011 as exports and orders gained.
Germany, the largest European economy, posted a solid 2.4 percent monthly rise in industrial output, while France managed a 1.4 percent gain. Lithuania, Denmark and Greece were among those with declines in production. But Europe remains dogged by record unemployment and what some economists consider an alarming slowdown in the increase in consumer prices.
The euro zone data apply to the 17 European Union nations that shared the euro in November; Latvia, which began using the euro on Jan. 1, will be included in euro zone statistics compiled after that date. In spite of this, borrowing costs for some of the euro zone’s most embattled governments are returning to precrisis levels, and a report last week from the European Commission showed that confidence among consumers and businesses picked up in December.
Ewald Nowotny, a member of the European Central Bank’s Governing Council, which sets interest rates, said Tuesday that the central bank’s forecast for economic growth of 1.1 percent this year might even turn out to be too pessimistic.
“Maybe there is even potential on the upside,” Reuters quoted Mr. Nowotny as saying in Vienna.
The E.C.B.'s prediction is hardly a torrid pace, but it is robust compared with the 0.4 percent annual pace recorded for the euro zone in the third quarter.
The euro zone industrial data apply to the 17 European Union nations that shared the euro in November; Latvia, which began using the euro on Jan. 1, will be included in euro zone statistics compiled after that date.
Germany, the largest European economy, had a 2.4 percent monthly rise in industrial output, while France managed a 1.4 percent gain. Lithuania, Denmark and Greece were among those with declines in production.