LONDON - Industrial output across the 17 countries that use the euro slumped by a monthly rate of 1.1 percent in October, official figures showed Thursday in the latest sign that the region's recovery from recession is failing to gather momentum.
The fall reported by the EU's
statistics office, Eurostat, was unexpected and affected all sectors, notably
energy. The consensus in the markets was for overall output to rise by 0.3
Though analysts cautioned that
industrial output can be volatile on a monthly basis, the figures provided
further evidence that the eurozone's muted recovery has failed to gain traction
in recent months. Decreases were recorded in the eurozone's two biggest
economies -- Germany and France. Declines were also seen in the bailed-out
economies of Greece and Portugal, and notably in Ireland, which saw output
slump 11.6 percent.
"This recovery is very, very
modest," said Bill Adams, senior international economist for PNC Financial
October's fall follows a 0.2 percent
drop in September and means that the sector could be a drag on the fourth
quarter. For an economy that only grew by a quarterly rate of 0.1 percent in
the third quarter, that's a concern.
The poor figures could pile further
pressure on the European Central Bank to do more to shore up the eurozone's
recovery, especially at a time when inflation is way below target.
Though it has little room to cut its
benchmark interest rate following last month's reduction to a record low of
0.25 percent, the ECB has other potential tools at its disposal.
It could give banks more long-term,
cheap loans so they can lend more. It could even decide to make banks pay to
keep funds on deposit at the central bank - again, to encourage them to lend
rather than hoard cash.
In a report Thursday, ratings agency
Standard & Poor's said the eurozone recovery will likely be "slow and
uneven" and require the support of the ECB. It predicts that the eurozone
economy will contract 0.6 percent this year and expand by just 0.9 percent next
"Whatever it opts to do, the ECB
will in our view have to play the role of the patient gardener in watering
those green shoots that have emerged in the eurozone since the middle of the
year," said Jean-Michel Six, S&P's chief European economist.