Eurozone industrial productions soars in January

[March 12, 2010]  LONDON (AP) -- Industrial production in the 16 countries that use the euro spiked by an impressive 1.7 percent in January from the month before, official figures showed Friday, raising hopes that the recovery from recession may be more buoyant than expected.

The spike reported by Eurostat, the EU's statistics office, was the largest monthly increase recorded since records began in 1990 and was way more than the 0.6 percent advanced expected in the markets.

Eurostat also revised December's figures to show a 0.6 percent increase instead of the 1.7 percent drop initially reported. That may well stoke talk that eurozone economic growth in the fourth quarter of 2009 may be revised up from the 0.1 percent currently estimated.

As a result of strong performances in December and January, eurozone industrial production rose by 1.4 percent in the year to January -- the first positive annual figure since April 2008.

The much better than anticipated figures may well ease concerns that the eurozone recovery is stalling -- concerns that had been reinforced by a run of poor data.

"January's healthy gain in eurozone industrial production provides some hope that the recovery in the wider economy has not ground to a complete halt," said Ben May, European economist at Capital Economics.

Industrial output is particularly important for the eurozone economy, which relies heavily on the export of high-quality manufactured goods, particularly from Germany, where industrial output increased by 1.6 percent during January.

However, Capital Economics' May said the industrial sector was not out of the woods yet given that the euro still trades above its long-run average against the dollar at a time when the global economic recovery remains fairly subdued,

"It remains essential that growth in other sectors of the economy picks up to ensure that the recovery can be sustained," said May.

The euro, which has been on the advance for the last couple of days, continued to prosper in the wake of the figures, trading 0.7 percent higher at $1.3773.

[Associated Press; By PAN PYLAS]

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