Europe Industrial-Output Slump Puts Damper on Short-Term Outlook

Industrial production in the euro area fell more than economists forecast in June, raising some questions about the state of the region’s recovery.

After Eurostat reported a 0.4 percent slump on the month, leaving production down 0.3 percent over the quarter, Credit Suisse Group AG said the number “implies downside risks” to its forecast for gross domestic product. For economists at ING Groep NV, the report “sheds a concerning light on the manufacturing recovery in 2015.”

The economy of the 19-nation euro area probably expanded 0.4 percent in the second quarter, economists in a Bloomberg survey said before the data are published on Friday. That would match the pace of the three months through March and mark a ninth straight expansion.

Before Wednesday’s industrial report, Credit Suisse was below consensus on second-quarter GDP growth, at 0.3 percent. But its longer-term view is that the recovery will continue and the current weakness is “statistical and transitory.”

That view is shared by Bert Colijn, an economist at ING in Amsterdam, even as he noted that manufacturing isn’t yet seeing a benefit from the weaker euro or the recovery in consumption.

“Some of the euro zone’s largest trading partners have gone through weak spells in the first half,” he said on Wednesday, highlighting the U.S. “While China’s performance is concerning, it seems that some of the other factors that are hindering a recovery in industrial production could be temporary.”

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