Eurozone posts record factory output fall

13th February 2009, Comments 0 comments

Industrial output in the 15 EU nations using the euro currency in 2008 fell 2.6 percent in December.

BRUSSELS – Factories and refineries in the recession-hit eurozone cut production at the fastest rate on record in January, and for 2008 as a whole, official EU data showed on Thursday.

Industrial output in the 15 EU nations using the euro currency in 2008 fell 2.6 percent in December and 12 percent for 2008 as a whole, both record slumps since records began in 1990, the European Union's Eurostat data agency said.

The news was little better for the 27-nation European Union as a whole.

Industrial production fell by a record 2.3 percent in December in the wider EU and by yet another record 11.5 percent for the whole of last year.

"It seems certain that eurozone manufacturers will continue to find life very difficult over the coming months as they are hit by deep slowdowns in both domestic demand and in key export markets, as well as intensifying competition," warned Howard Archer, chief European economist at London-based Global Insight.

He saw no sign of any green shoots of recovery.

"Production of intermediate goods, durable consumer goods and capital goods all saw very sharp declines in December, while the weakness in output was widespread across countries."

To add to the general industrial gloom in the recession-hit eurozone, November's already bad figures, showing a factory output decline of 1.6 percent from October was revised downwards to 2.2 percent, with a similar revision for the EU figures.

On a monthly basis, due to the cold weather, energy production was a rare riser, up 1.1 percent in the eurozone, but offering no consolation to most industrial sectors.

Production of durable consumer goods dropped by 2.8 percent among the countries using the euro, whose numbers were swelled to 16 in January when Slovakia joined up.

On a national basis, industrial production rose only in Lithuania.

The most significant falls were registered in European industrial powerhouse Germany which saw a 4.9 percent drop, Romania (8.6 percent drop), Ireland (10.2 percent) and the then un-eurozone Slovakia (12.7 percent).

"The latest euro-zone industrial production figures are simply dreadful," Ben May, European Economist at Capital Economic, said bluntly.

The decline in output was weaker than the consensus forecast for a 2.2 percent monthly fall, he added.

He said the figures support the view that gross domestic production (GDP) figures to be released Friday would show that the economy had contracted by some 1.5 percent in the last quarter of 2008.

"One crumb of comfort is that the industrial surveys no longer point to further sharp falls in the annual growth rate," he said.

"Unfortunately, there is little evidence to suggest that output is likely to rebound in the near term either."

[AFP / Expatica]

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