Euro-Area Industrial Production Surges Most Since 2009

  • January increase boosts first-quarter growth outlook
  • Manufacturing survey suggests some weakness in February

Industrial production in the euro area opened 2016 with its strongest monthly performance in more than six years, boosted by energy and capital goods.

Output jumped 2.1 percent in January from December, helped by growth in Germany, France and Italy, the Eurostat statistics office in Luxembourg said on Monday. From a year earlier, production rose 2.8 percent, the biggest annual jump since 2011.

Economists surveyed by Bloomberg earlier this month forecast euro-area growth of 0.4 percent this quarter and next, up from 0.3 percent in the final three months of 2015. While inflation remains far below the European Central Bank’s goal, prompting policy makers to ramp up stimulus yet again last week, the economy’s performance has been relatively consistent in recent quarters.

The monthly increase in production in January was the biggest since September 2009 and exceeded the 1.7 percent median forecast of economists. Howard Archer, an economist at IHS in London, said while the numbers give a “serious boost” for the first-quarter growth outlook, surveys suggest a weaker February. Markit’s manufacturing Purchasing Managers Index fell to the lowest in a year last month.

“Anyone that has been following the news regarding the ECB decision to expand QE recently must have gotten the idea that the eurozone economy is in terrible shape,” said Bert Colijn, an economist at ING in Amsterdam. “While inflation is indeed far from the ECB target, the performance of the eurozone economy has not been all that bad.”

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