Eurozone industrial production was much stronger than expected in August, data showed on Wednesday, indicating the economic slowdown in the third quarter might be smaller than feared. The European Union's Statistics Office said industrial production in the 17 countries using the euro rose 1.2 percent month-on-month in August for a 5.3 percent year-on-year increase.
Economists polled by Reuters had expected a 0.7 percent monthly decline in output and a 2.2 percent year-on-year increase. "Even if production were to fall markedly in September, the quarterly growth rate would still be higher in Q3 than in Q2, which poses an upward risk to our forecast of the economy contracting in Q3," said Aline Schuiling, a Senior Economist at ABN Amro Bank NV.
But the eurozone economy will still slow down markedly and it is likely to show already in the September output figures. The European Commission expects economic growth in the eurozone to slow to 0.1 percent quarter-on-quarter in the third and fourth quarters of 2011 from 0.2 percent in the April-June period, largely because of the negative impact on confidence from the sovereign debt crisis.
Large European manufacturers have a pessimistic view of the last quarter of the 2011. Swedish truck maker Scania said on Monday it would lower its production in Europe from November due to falling demand as government financial problems in Europe and the US have now begun to affect economic activity and have led to hesitation among customers.
Germany's biggest steelmaker ThyssenKrupp is to cut production at its Steel Europe unit by 500,000 tonnes in the last quarter of 2011, a source told Reuters at the end of September, and the world's biggest steelmaker ArcelorMittal said it saw a slowdown of orders from Europe. The August data showed that the annual increase in the production of capital goods, used for investment, jumped 12.2 percent and the output of durable consumer goods, an indication of consumer confidence, rose 2.8 percent in annual terms.
In the eurozone's biggest economy, Germany, output fell 1 percent month-on-month but was still 7.8 percent higher than a year earlier. Ireland, which is implementing an austerity programme to regain market confidence in its public finances, showed a production jump of 4.4 percent month-on-month and 10.1 percent year-on-year.