Eurozone industrial production in another big rise

[April 20, 2010]  LONDON (AP) -- The industrial recovery in the 16 countries that use the euro appears to be gathering steam after official figures Wednesday showed that output from the sector spiked by way more than anticipated during February.

Eurostat, the EU's statistics office, said that industrial production in the eurozone rose by 0.9 percent in February from the month before, way higher than the 0.1 percent increase anticipated in the markets.

It's also the second sizable monthly rise following January's 1.6 percent increase, and is likely to reinforce hopes that the recovery from recession is proving to be more robust than anticipated.

Industrial output is particularly important for the eurozone economy, which relies heavily on the export of high-quality manufactured goods, particularly from Germany.

Rising export demand, a fall in the value of the euro and the need to rebuild inventory levels following the recession all seemed to give a fillip to output during the month.

"February's industrial production figures confirm that the sector continues to expand at a healthy pace and provides hope that the slowdown in the wider economy in Q4 will prove temporary," said Ben May, European economist at Capital Economics.

In the fourth quarter of 2009, economic output in the eurozone was flat, down from the 0.4 percent increase recorded in the third quarter, which officially brought the end to the recession.

Despite the robust industrial pickup, the figures are unlikely to cause too much of a stir at the European Central Bank, especially as inflation and retail spending remain subdued, and upcoming budgetary cuts in a number of countries, particularly Greece, will likely weigh on activity. As a result, the consensus in the markets is that the central bank will keep its benchmark interest rate on hold at the historic low of 1 percent for much, if not all, of this year.

On a year-on-year basis, Eurostat said industrial production was 4.1 percent higher, way up on January's equivalent of 1 percent, which was the first positive annual figure since April 2008.

For the wider 27-nation EU, which includes non-euro members such as Britain and Sweden, industrial output rose by 0.7 percent during February. Though lower than January's 1.7 percent increase, it still represents a solid performance.

[Associated Press; By PAN PYLAS]

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