Industries across the euro zone cranked up output in November and Germany ended the year with its strongest growth in five years, data showed on Thursday, pointing to an economic spurt that may be arriving earlier than some ECB policymakers expect.
Euro zone industrial output in the 19-country currency bloc surged 1.5 percent on the month and 3.2 percent year-on-year as firms stepped up production before Christmas. Both figures were far better than expected.
That gelled with a surprisingly large increase in Italian industrial production, also reported on Thursday, and similarly robust numbers earlier this month from France.
The German statistics office, meanwhile, estimated growth in the euro zone largest economy was around 0.5 percent for the fourth quarter and expanded by 1.9 percent in 2016, the strongest rate in five years.
Economists said these figures added to the evidence that euro zone gross domestic product will have picked up in the last quarter of last year.
The numbers are also relatively unexpected. Indeed, investment bank Citi ranked the euro zone at the top of its Economic Surprise Index at year-end, higher even than the rating for Britain’s unforseen post-Brexit performance.
The strong rise of industrial output “reinforces our belief that euro zone GDP growth could well have reached 0.5 percent quarter-on-quarter in the fourth quarter of 2016,” said Howard Archer, economist at IHS Global Insight.
Euro zone GDP grew a modest 0.3 percent in second and third quarter of last year, after a 0.5 percent rise in the first quarter.
Thursday’s figures add to a jump in the bloc’s economic sentiment which in December reached its strongest level since March 2011.
Euro zone consumer confidence also hit a 20-month high in December and has been rising for four consecutive months, European Commission’s estimates showed.
Monthly retail sales in the bloc did fall by 0.4 percent in November but only after a rise by 1.4 percent in October, by far the largest in years.
The surprising burst in economic activity may fire up criticism from economists and politicians in countries such as Germany that the European Central Bank is hanging on too long to its ultra-easy monetary policy, including asset purchasing.
The ECB, however, remains cautious about the outlook and will need sustained evidence before it moves.
Indeed, the improved outlook for the last quarter of the year may however not carry over to 2017 in part because it brings with it an increase in prices.
“We expect rising inflation to weigh on consumer spending growth, causing overall GDP growth to slow in 2017,” Jack Allen of Capital Economics said.
Euro zone consumer inflation in December was 1.1 percent, the highest level since September 2013, as oil prices are going up. It remains under the roughly 2 percent target sought by the ECB, however.
A Reuters poll of over 65 economists released on Thursday showed little change in forecasts for euro zone growth and inflation with respondents citing uncertainty from rising protectionist sentiments after the Brexit vote last June and Donald Drumpf’s U.S. election win.
In addition, the November euro zone industrial output data confirmed caution is still prevailing among firms, as political uncertainty over the coming months restrains investment.
The monthly output rose strongly for non-durable consumer goods, such as clothing or foodstuff, a sign that companies were betting on more consumption ahead of the Christmas shopping.
Production grew markedly on the month also for intermediate goods and energy, but it rose only slightly for capital goods, like machineries, a sign of only limited appetite for long-term investment.
Output of durable goods, such as cars or refrigerators, was the only component of the indicator to record a drop, by 0.1 percent on the month, confirming firms’ cautious approach as consumers were less keen to purchase more expensive items.
Originally reported by Reuters.
Remember, no issue has a quick fix solution. Thus, always ensure to consult highly knowledgeable group of professionals whom would provide you with a collective advice, never individual advice. This group advice and approach is unique with CWIIL Group and is based on the overall Management Philosophy of all CWIIL Group Companies.
Consulting CWIIL Group of Companies, for any / all investment matters ensures advice based on highest level of knowledge which are given to you by a team of select research-oriented experts whom each will do their own assessment of your matter, and also assess it together, thus ensuring that in case a mistake has been made by one, it will be noticed and corrected even before it is being passed on to you. Receiving incorrect and un-knowledgeable investment advice can be disastrous and thus should be avoided.
CWIIL Group of Companies is a global group of multi-specialised units with diversified interests and activities, wherein each company is a separate legal entity registered under prevailing laws in different parts of the world. CWIIL Group of Companies Products, Services, Project and Solutions are in a multitude of Verticals including, but not limited to, Infrastructure, Power, Oil & Gas, Legal, Media, Technology, ITES, HR, Shipping, Aviation, Real Estate, Hospitals, Health and Medicine, Education, Funding & Investment, Business and Legal Consultancy, and Public Private Partnerships, and other CWIIL Group Units, worldwide, to name a few.
For Further Queries Feel Free to Contact :
For Any / All Other Queries :
CWIIL Group Global Regional Headquarters Denmark,
Address : No. 1, Klokkebjergevej, DK6900 Skjern, Denmark
Voice : +45.5148.3608
Fax : +45.7014.1498
Email : email@example.com
Web : www.cwiilgroup.eu
Connect : LinkedIn – Twitter – Facebook – Quora
Office Hours :
Monday to Friday : 10.00 – 17.00 CET.
Saturday : 10.00 – 14.00 CET.
Sunday : Closed.
The Corporate Communications Team would require minimum a fortnight for Reviewing & Responding to Queries, which please note.