Euro zone industrial production soared in August far beyond expectations as manufacturers boosted investment despite fears of an upcoming recession, official estimates showed on Wednesday.
The European Union’s statistics office Eurostat said industrial production in the 19 countries sharing the euro increased 1.5 per cent month-on-month in August for a 2.5 per cent year-on-year rise.
Economists polled by Reuters had expected much more modest increases of 0.6 per cent on the month and 1.2 per cent year-on-year, after production fell in July.
The better-than-expected data failed however to dispel fears of a recession.
“All the evidence suggests that euro zone industry is heading for a significant contraction in the coming months,” said Andrew Kenningham, chief Europe economist at Capital Economics, a London-based research outfit.
He underlined that the rise in August did not fully reverse the 2.3 per cent monthly fall recorded in July.
The positive reading was driven by output of capital goods, such as machinery, which rose 2.8 per cent compared with July, in a sign of optimism pointing to new appetite for investment.
Manufacturers also produced more consumer goods, while they cut their energy output, data showed.
Among the bloc’s largest economies, France’s industrial production rose 2.5 per cent on the month, Italy’s was up by 2.3 per cent, whereas output declined in Germany by 0.5 per cent.