Weak eurozone output points to poor growth

PARIS/ROME – French and Italian industry output fell unexpectedly in December, following a plunge in German production, suggesting a nascent euro zone recovery lost momentum in the fourth quarter.

French factory output fell 0,1 per cent month-on-month, national statistics office INSEE said yesterday, also revising down November’s rise to 0,6 per cent from an initially reported 1,1 per cent.Italian seasonally adjusted industrial output was also much weaker than expected, falling 0,7 per cent after a 0,4 per cent rise the month before, statistics agency ISTAT said.Both figures were forecast to rise, by 0,5 and 0,1 per cent respectively.Yesterday’s figures chimed with data last week which showed German output fell sharply in December, by 2,6 per cent on the month, dealing a fresh setback to recovery hopes in Europe’s largest economy.France and Germany exited recession in the second quarter, Italy in the third. Fourth quarter GDP figures for all three, and the euro zone as a whole, are due on Friday.The euro zone is forecast to show quarterly growth of 0,3 per cent, according to a Reuters poll of economists. Those estimates were gathered late last week after the poor German numbers but the Italian and French data skew risks to the downside.A spell of severe winter weather in Europe will not have helped.Economy Minister Rainer Bruederle has already said German growth in the first quarter of 2010 could be near zero.And the VDMA industry association said yesterday that output in Germany’s engineering sector fell by nearly a quarter last year, worse than the industry’s most pessimistic forecast, and is not expected to rebound in 2010.The consensus forecast is for thin growth of just 0,1 per cent in Italy, 0,2 per cent in Germany and a more robust 0,5 per cent in France.Yesterday’s figures contrasted with brighter data in last week’s purchasing managers’ index survey which showed the euro zone factory sector growing in January at its fastest pace in two years with Germany, France and Italy all expanding.French industrial production fell across the board in December, with the exception of the pharmaceuticals industry. Car production was a notable sufferer.In contrast to the poor performance of euro zone factories, British manufacturing grew by 0,9 per cent in December from an upwardly revised 0,2 per cent in November, three times faster than economists had forecast.Britain has already released preliminary fourth quarter GDP figures, showing it finally exited recession late last year with threadbare growth of just 0,1 per cent.- Nampa-Reuters