What is this? Good news from the Eurozone

Posted: May 19, 2013 in Europe, Eurozone Economy
Tags: , , , , , , ,

May 14 2013: put that date in your diary. For on that day in history data was released showing industrial production across the euro area rose by no less than 1 per cent in March on the month before. It was the second month in succession to see a jump in production, although in February the increase was a more modest 0.3 per cent.

Chris Williamson at Markit said: “The March rise in production was the largest since July 2011.” He added: “The data therefore bode well for GDP to show a significantly weaker decline than the 0.6 per cent contraction seen at the end of last year, and even raises the possibility of the recession having ended.”

Alas, look a little closer and the story that emerged is not quite so good. Mr Williamson put it this way: “[The rise in production] was in part buoyed by a 3.8 per cent surge in energy production. The upturn also masked worryingly strong variations within the single currency area: production surged 1.7 per cent higher in Germany but fell by 0.9 per cent and 0.8 per cent in France and Italy respectively.”

He said: “Any improvement or respite from recession looks likely to be short-lived, as the business surveys have already started signalling a renewed weakening.”

On the other hand, at least there are signs that Germany may be turning. Not only did data reveal a rise in industrial production, the latest Zew index – a measure of investors’ expectations – rose. According to Capital Economics, it is consistent with growth in the Germany economy of around 2 per cent, from just 0.4 per cent in Q4.

So there you have it, Germany is doing well but other parts of the Eurozone are not so strong. Maybe May 14th was not so unusual after all.

© Investment & Business News 2013

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