Eurozone industrial output dives

Eurozone industrial output plunged by a record 18.4% year-on-year in February, the biggest fall since records began in 1990, according to Eurostat.

Compared with the previous month, output across the 16 nations that share the euro fell 2.3%.

The drop came as factories in the eurozone cut output in light of a drop in global demand for their goods.

Across the 27-nation European Union, industrial production fell 1.9% in February, and 18.4% across 12 months.

'Frightening pace'

Analysts said the gloomy figures were actually better than had been predicted.

"While the fall on the month was slightly better than - or more accurately not quite as bad as - expected, the shocking fact is that almost a fifth of euro area production has now been wiped out in the past year," said Colin Ellis, European economist at Daiwa Securities.

"This frightening pace of contraction is yet to have fed through fully to the labour market, raising the prospect of sizeable job losses that will also weigh on spending and activity."

Mr Ellis said the margin of spare capacity in the eurozone economy could soon "look out of control", and could provide a significant challenge for the European Central Bank (ECB) to overcome if it wanted to get inflation back near 2% next year.

The ECB wants inflation to be below, but close to, 2%.

Big drops

The biggest monthly drops came in Lithuania (4.1%), Estonia (3.6%), Italy (3.5%) and Germany (3.2%).

The only countries to officially record a rise were Portugal, where output rose by 2.4%, Greece, up 1.7%, and Poland, up 0.4%.

Industrial output in the UK fell by 1.2%.

For the year as a whole, Estonia (30.2%), Latvia (24.2%) and Spain (22%) saw the biggest falls.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/8001800.stm

Published: 2009/04/16 10:49:10 GMT