Euro zone April output up

BRUSSELS: Euro zone industrial output unexpectedly rose in April from March, data showed, though economists said the region's economic growth rate was still likely to slow significantly in the second quarter.

The European Union's statistics office, Euro-stat, said industrial production in the 17 countries using the euro, a key component of gross domestic product, rose 0.2 percent month-on-month for a 5.2 percent year-on-year gain.

Economists polled by Reuters had expected a 0.2 percent monthly decline and a 4.9 percent annual rise.

"While better than expected, it nevertheless ties in with the view that the euro zone manufacturing sector has come off the boil after a strong start to 2011 following a decent recovery in 2010," said Howard Archer, economist at IHS Global Insight.

Economists noted that the manufacturing purchasing managers' index weakened in May and new orders growth, export orders growth and backlogs of work all slowed to eight-month lows.

Stocks of finished products fell at the slowest rate since December 2008 and employment growth eased back to a four month low economists said.

"This means that the second quarter will see a material slowdown in the GDP dynamics, probably to about half the growth pace recorded in Q1, when GDP expanded 0.8 percent quarter-on- quarter," said Marco Valli, euro zone economist at Uni-Credit.

The April rise in industrial output appeared to be mainly thanks to a jump for durable consumer goods, up 1.3 percent in April against March, and capital goods, which rose 0.5 percent.

This helped offset a 3.7 percent monthly fall in the production of energy.

In year-on-year terms, durable consumer goods output rose 5.2 percent and capital goods 9.7 percent.

Copyright Reuters, 2011