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