European Industrial Output Rose More Than Forecast in November
European industrial production advanced more than economists forecast in November, led by output of intermediate goods such as car engines and steel.
Production in the euro area rose 1.2 percent from October, when it increased 0.7 percent, the European Union’s statistics office in Luxembourg said today. Economists had forecast a gain of 0.5 percent, the median of 31 estimates in a Bloomberg survey showed. Production increased 7.4 percent in the year.
German companies including Siemens AG, Europe’s largest engineering company, have benefited from rebounding demand for capital goods as the global economy strengthens. European economic confidence improved more than economists forecast in December, led by rising optimism among German executives, even as nations from Ireland to Spain struggled to trim deficits.
“The near-term outlook for Eurozone industrial production is promising,” said Howard Archer, chief European economist at IHS Global Insight in London. “Nevertheless, it still seems likely that euro-zone manufacturers will find life more difficult as 2011 progresses.”
The euro was little changed after the release, trading at $1.2990 at 11:49 a.m. in Frankfurt, up from $1.2974 yesterday.
Germany led the euro region’s expansion in the third quarter, expanding 0.7 percent from the previous three months. That’s more than double the euro region’s 0.3 percent pace in that period. Spain’s economy stalled and Greek gross domestic product declined in the third quarter as governments stepped up austerity measures to help fight the region’s fiscal crisis.
“There are several good reasons to look into 2011 with cautious optimism, not least the economic outlook,” Bundesbank President Axel Weber said at an event in Frankfurt late yesterday. “The outlook for 2011 depends on the extent to which the right lessons are drawn from the crisis.”
While investor concern about spreading turmoil has pushed down the euro 10 percent against the dollar over the past year, a weaker currency is bolstering exports. Euro-area shipments to the U.S. jumped 18 percent in the nine months through September from a year earlier while exports to China surged 39 percent over that period.
Siemens said yesterday that it’s confident of reaching its full-year targets. The Munich-based company is “off to a good start” and “fully on track to reach” targets, Chief Financial Officer Joe Kaeser said in a statement on Jan. 10.
Euro-area production of intermediate goods jumped 1.6 percent in November from the previous month, today’s report showed. Output of capital goods rose 1.4 percent and energy production increased 1.5 percent. Production of durable-consumer goods rose 0.1 percent from the previous month.
European companies have relied on faster-growing markets such as China to boost sales as governments across the region cut spending to trim deficits. Chinese imports jumped 26 percent in December from a year earlier while exports rose 18 percent.
European Central Bank President Jean-Claude Trichet, speaking on behalf of his global counterparts, on Jan. 10 called growth in emerging economies “impressive.”
“Since the start of the recovery, we were observing results in terms of facts and figures, in terms of real economic evolution, that were better than forecast,” Trichet said after the global economy meeting in Basel, Switzerland. “I would say that it’s also the case until now in the euro area.”
The Frankfurt-based ECB tomorrow will probably keep borrowing costs at 1 percent. The central bank last month forecast the 17-member euro-region economy to expand about 1.4 percent this year. Estonia joined the euro area on Jan. 1.
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