- Eurozone factory output continues to fall steeply!
by Reuters, The Guardian
Industrial production drops by 1.4% in October across the bloc despite expectations among economists of modest growth
Eurozone factory output continued its steep fall in the autumn, underscoring the feeble domestic demand that risks prolonging the bloc’s recession.
Industrial production in the 17 countries sharing the euro fell 1.4% in October after falling sharply in September, the EU’s statistics office Eurostat said. Modest growth had been expected by economists polled by Reuters. Factories proved surprisingly resilient over the summer, with two months of moderate gains, but the new data supports forecasts of a third quarterly contraction in the eurozone’s economy in the October-to-December period. After three years of a debt crisis that has driven up unemployment to a record level and pushed governments to slash spending, the economy is caught in a spiral: households are not spending so companies are not selling, forcing them to cut staff which then further weakens consumption.
“Domestic demand will only turn around when uncertainty among the companies about the fate of the euro has been dispelled, prompting them to increase investment again,” Ralph Solveen, an economist at Commerzbank, wrote in a research note.
Policymakers in the eurozone, which generates a fifth of global output, are divided over the chances of an economic recovery next year but the European Central Bank has downgraded its forecasts for 2013 and expects any rebound to come in the second half of next year. The bloc’s €9tn economy is likely to contract by at least 0.4% this year, marking its second recession since 2009 and contrasting with the United States and much of Asia and Latin America, where growth is gradually returning.