Euro-Area Industrial Output Unexpectedly Fell in November

Euro-area industrial production unexpectedly fell in November, adding to signs the 17-nation currency bloc’s recession deepened in the fourth quarter.

Output in the euro area dropped 0.3 percent from October, when it declined a revised 1 percent, the European Union’s statistics office in Luxembourg said today. Economists had forecast an increase of 0.2 percent, according to the median of 37 estimates in a Bloomberg News survey. Output fell 3.7 percent from the year-earlier period.

The euro-area economy probably shrank 0.3 percent in the final three months of last year after contractions in the previous two quarters, according to the median of 22 economists’ forecasts in a Bloomberg News survey. The European Central Bank estimates the euro-area economy contracted 0.5 percent in 2012 and will shrink 0.3 percent this year.

“For sure we will get a GDP decline in the fourth quarter,” said Jens Kramer, an economist at NordLB in Hanover, Germany. A further contraction in the first quarter is “very likely,” he said. “Almost everywhere but Germany we have high unemployment, consolidation processes and the situation for private consumption is extremely bad.”

The euro was little changed after the data were released and traded at $1.3369 at 1:10 p.m. in Brussels, up 0.2 percent.

Market Contraction

Industrial output in Germany, Europe’s largest economy, increased 0.1 percent after a 2 percent drop in October, today’s report showed. French production rose 0.5 percent, while Italy and Spain reported declines of 1 percent and 2.5 percent, respectively.

Continental AG, Europe’s second-largest maker of auto parts, said today that sales and profitability growth may slow in 2013 as the region’s market contraction causes unpredictability for the global car industry. The Hanover-based manufacturer fell to the lowest in more than six weeks after saying sales will rise about 5 percent this year, compared with an increase of about 7 percent in 2012.

Energy production dropped 1.6 percent after a 0.3 percent decline in October, according to today’s report. Output of durable and non-durable consumer goods fell 1.1 percent and 1.2 percent, respectively.

While production of capital goods rose 0.7 percent, this “might be seen as a technical correction and not as the harbinger of a solid recovery” in this industry, said Annalisa Piazza, an analyst at Newedge Strategy in London.

‘Modest Recovery’

“Industrialists remain very cautious with their capital expenditures as the economic environment remains extremely uncertain and signs of a modest recovery are only expected in the second half of 2013,” she said.

In Asia, China’s unexpected surge in exports last month renewed concern from analysts at Goldman Sachs Group Inc., UBS AG and Australia & New Zealand Banking Group Ltd. that statistics from the nation can be unreliable.

The 14.1 percent jump from a year earlier was the biggest positive surprise since March 2011, according to data compiled by Bloomberg. The increase didn’t match goods movements through ports and imports by trading partners, according to UBS, while Goldman Sachs and Mizuho Securities Asia Ltd. cited a divergence from overseas orders in a manufacturing index.

In the U.S., Treasury 10-year notes held gains as economists said a government report this week will show consumer prices were in check in December.

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