Output in the 17-nation euro area advanced 0.6 percent from June, when it fell 0.6 percent, the European Union’s statistics office in Luxembourg said today. Economists had projected a gain of 0.1 percent, the median of 30 estimates in a Bloomberg News survey showed. From a year ago, production fell 2.3 percent.
European manufacturers are seeking ways to lower costs as the euro region’s deepening economic slump, faltering global growth and budget cuts from Spain to Italy erode export and consumer demand. Euro-area manufacturing contracted more than initially estimated in August and economic confidence fell to a three-year low as governments struggled to contain the turmoil.
“We’re limping into the second half of the year,” George Magnus, a senior economic adviser at UBS AG (UBSN) in London, told Tom Keene and Sara Eisen on Bloomberg Television on Sept. 10. “We’re not in a global recession, but it’s going to be a close- run thing in 2013.”
Euro-area output of capital goods led gains, rising 2.4 percent in July from the previous month, when it fell 1.2 percent, today’s report showed. Production of durable consumer goods fell 0.5 percent, while output of intermediate goods rose 0.1 percent. Energy production slipped 1.2 percent.
Europe’s economy may struggle to gather strength after shrinking 0.2 percent in the second quarter, with at least five nations including Italy and Spain in recession. In Germany, Europe’s largest economy, business confidence fell for a fourth month in August and investors also grew more pessimistic.
The Organization for Economic Cooperation and Development said on Sept. 6 that Europe’s fiscal crisis is hurting growth across Group of Seven economies, calling it the “most important risk” for the global economy. It also cut its 2012 economic forecasts for the largest euro-area economies including Germany.
Bayerische Motoren Werke AG, the world’s largest maker of luxury cars, last month reported its first drop in quarterly profit in almost three years and warned that Europe’s debt crisis could cast further clouds on the global growth outlook. MAN SE, the German truckmaker that lowered its 2012 earnings forecast in July, said on on Aug. 31 it may cut production shifts and eliminate additional temporary staff.
Euro-area unemployment held at 11.3 percent in July, a record, as companies from Ireland to Spain eliminated jobs. A gauge of manufacturers’ employment expectations declined in August, a report by the European Commission showed on Aug. 30.
Economies around the globe are also faltering. In the U.S., manufacturing contracted for a third month in August in the longest decline since the recession ended in 2009. China’s manufacturing last month shrank at the fastest pace since March 2009, the purchasing managers’ index released on Sept. 3 by HSBC Holdings Plc and Markit Economics showed.
So far, Germany’s expansion has helped counter some of the impact of tougher austerity measures. German industrial output rose 1.3 percent in July from the previous month, when it slipped 0.4 percent, today’s report showed. Italy and Spain reported monthly declines of 0.2 percent. The Netherlands reported a drop of 0.8 percent, while France had a gain of 0.3 percent and Greece reported an increase of 1.8 percent.
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