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Tuesday 16th of March 2010
March 14, 2010    

Euro zone industrial production in record growth in Jan

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by Kay Murchie
Euro zone industrial production in record growth in Jan

Industrial production in the euro zone exceeded expectations in January, posting growth of 1.7%, which represented the biggest monthly increase since records began in January 1990.

The increase boosted hopes that the 16-member bloc’s economic recovery is gathering pace.

It was recently revealed the euro zone economy grew by just 0.1% in the fourth quarter of 2009 but many hope the figure will be revised upwards.

Meanwhile, European Union statistics office, Eurostat, said production of durable consumer goods, which includes items such as cars, furniture and appliances, grew by 2%.

Factory output during the month compared with January last year was up 1.4% - the first year-on-year rise since April 2008.

Commenting on the figures, Ben May from Capital Economics, said: “Given that the business surveys point to a further improvement in the industrial sector in the near term, a sharper quarterly rise [in economic growth] is certainly possible.

“While all this is pretty encouraging, the euro’s strength and the likely slowdown in the global recovery will weigh on the [industrial] sector later in the year,” he added.

Earlier this month, the European Central Bank (ECB) elected to keep interest rates on hold at the historic low of 1% for the tenth consecutive month.

Interest rates are expected to remain on hold until at least 2011, as a result of uneven growth and low inflation.

The euro zone, as a whole, has suffered in recent weeks, due to the debt crisis in Greece.

Growing fears over the debt crisis in Greece have weakened the value of the euro as Greece takes action to reduce its public deficit from 12% to 8% of GDP this year.

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