European Industrial Output Increased in January, Led by Germany
European industrial production increased in January for a fourth month as companies in Germany, the region’s largest economy, boosted output to meet surging export orders.
Production in the euro area rose 0.3 percent from December, when it also increased 0.3 percent, the European Union’s statistics office in Luxembourg said today. That matched the median forecast of 23 economists in a Bloomberg News survey. Production rose 6.6 percent in the year.
Germany is driving the region’s expansion as governments from Portugal to Greece seek ways to restore investor confidence in their ability to tackle budget deficits and fight the debt crisis. German factory orders increased more than economists forecast in January, and business confidence rose to a fresh record last month. Volkswagen AG (VOW)’s Audi division said on March 8 that it will expand output in emerging markets.
“Germany will clearly remain the growth engine, with France will also showing a good performance,” said Jens Kramer, an economist at Nord LB in Hanover, Germany. “The euro region is on a robust growth path overall even with huge divergences remaining between large countries and peripheral states.”
European leaders agreed over the weekend to broaden the size and scope of their 440 billion-euro ($614 billion) bailout fund to defuse the region’s debt crisis. They also eased the terms of rescue loans to Greece.
Germany, France
In Germany, production rose 0.1 percent after a 1 percent increase in December, today’s report showed. French output growth accelerated to 1.1 percent from 0.2 percent.
Euro-area production of intermediate goods and durable consumer goods both rose 2.5 percent in January from December. Output of capital goods slipped 0.3 percent and energy production dropped 3.1 percent.
The euro-region economy may expand about 1.7 percent this year and 1.8 percent in 2012, the European Central Bank said on March 3. It had previously projected growth of 1.4 percent and 1.7 percent, respectively.
Bayerische Motoren Werke AG (BMW), the largest maker of luxury vehicles based in Munich, on March 9 forecast “dynamic” sales growth through the first half of this year after deliveries surged 22 percent in February. Jean-Paul Agon, chief executive officer of L’Oreal SA (OR), the world’s largest cosmetics maker, said last month he’s “very confident” about the earnings outlook for this year with strong sales growth among Asian markets.
With a strengthening economy giving labor unions more room to demand higher wages just as companies seek ways to pass on surging energy costs, the ECB has signaled it is ready to raise borrowing costs as soon as next month.
Euro-area inflation accelerated to 2.4 percent in February, the fastest in more than two years and above the ECB’s 2 percent ceiling. Core inflation, which excludes volatile costs including energy, quickened to 1.1 percent in January.
“Once the genie of inflation is out of the bottle it might be too late,” ECB council member Yves Mersch said on March 3 after the central bank kept its key rate at 1 percent. “Be assured that any threat to price stability in the medium term will be combated pre-emptively and vigorously.”
To contact the reporter on this story: Simone Meier in Zurich at smeier@bloomberg.net
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
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