Published December 12, 2012
LONDON – Industrial production across the 17 European Union countries that use the euro unexpectedly slumped in October, official figures showed Wednesday, in another sign that the region's recession is getting worse and weighing on big economies like Germany.
Eurostat, the EU's statistics office, said industrial production fell by a monthly 1.4 percent, in contrast to expectations of a modest 0.2 percent increase.
Germany, Europe's biggest economy, fared particularly badly, with its industrial sector posting a 2.4 percent monthly decline in output. Germany has actually seen its industrial sector, made of heavyweights such as car companies Daimler AG and Volkswagen AG, shrink for three straight quarters.
"If any further evidence were needed that the economic weakness is no longer confined to the periphery, German industrial production has dropped by 3.8 percent in the last year, a bigger fall than that seen in both Spain and Greece," said Jonathan Loynes, chief European economist at Capital Economics.
The eurozone fell back into a mild recession in the third quarter — officially defined as two straight quarters of negative growth — after its economy contracted by a quarterly rate of 0.1 percent.
Coming in the wake of a bigger-than-expected 1.2 percent drop in retail sales in October, Wednesday's figures have reinforced expectations that the eurozone recession has deepened heading into the final quarter of the year. Industrial output is a core part of the eurozone economy, not least in Germany which has prospered over the past few years through the export of its high-value products, such as cars and machinery.
James Ashley, senior European economist at RBC Capital Markets, said the figures are "certainly consistent with the general message from the 'soft' survey readings which suggest that the risks to our euro area Q4 GDP forecast of -0.2 percent are skewed to the downside."