Eurozone industrial output rises sharply at start of year

   PARIS, March 11, 2008  – Output data for France, Italy and Germany
shows industrial production expanding strongly at the start of the year, but
survey data points to a slowdown in the months ahead, analysts said Monday.
   French industrial output rose 0.5 percent in January following a 0.6
percent increase in December, while Italian industrial production rose 1.3
percent in the same period, well above market expectations, official data
showed Monday.
   The Italian and French data followed Friday’s news of a 1.8 percent
increase in German industrial production, compared with market expectations
for a rise of just 0.2 percent.
   "For the eurozone as a whole, strength has been evident in January
industrial production in Germany, France and Italy now, which gets the first
quarter off to a decent start in terms of signals from hard data for first
quarter GDP growth," said Ken Wattret of BNP Paribas.
   "There is a lot of information yet to come, however, which could change the
picture, making it more in line with the sluggish growth rate suggested by
reliable leading indicators," he said.
   The rebound in Italian output follows a particularly poor performance in
the fourth quarter and the underlying trend therefore remains quite weak,
analysts said.
   "The positive momentum won’t be sustained, as manufacturing surveys keep
heading south. Despite today’s positive outcome, we expect industrial
production to remain broadly flat in the first quarter," said analyst Chiara
Corsa of UniCredit.
   "We think output growth will likely remain subdued, given weakness in
industrial orders and gloomy sentiment among entrepreneurs," said Giada Giani
of Lehman Brothers.
   Diego Iscaro of Global Insight said the strength of the euro and softer
global growth would take their toll on French exports and output.
   "We see the euro appreciating further against the US dollar, as a result of
lower US growth and worsening interest rate differentials, while global demand
should not pick up dramatically any time soon," he said.
   Data published in Britain on Monday showed that industrial production
dipped by 0.1 percent in January from December. On a year-on-year basis, it
rose by 0.4 percent.

AFP