Eurozone industrial output snaps losses on rise in factory output

Eurozone’s industrial output snapped losses for the first time in three months since April, following rise in factory output, a sign that the area’s modest economic recovery is on track despite weak demand for exports from its developing counterparts.

Industrial production rose 1.1 percent from March, and was 2.0 percent higher than that in April 2015. That was a better outcome than anticipated, with economists surveyed estimating that output will rise 0.6 percent on the month.

The Euro area’s industrial output was backed by a large turnaround in the output of factories, mines and utilities, which rose by 1 percent compared with the final three months of 2015, having declined by 0.3 percent in that earlier period.

However, spending on consumer durables led most of the rise in the industrial output, confirming that household consumption remains a major driver of the recovery process in the common currency zone. Further, fall in unemployment and subdued oil prices have boosted spending capacity, leading to rise in disposable incomes.

Economists at the European Central Bank expect the Eurozone to grow at an unchanged pace of 1.6 percent over 2016 as a whole. However, policy makers have warned of a basket of threats to that trajectory, including the outcome of a June 23 referendum by the British voters on whether to remain or leave the European Union.

Despite the release of firmer than expected Eurozone industrial production data for April, EUR/USD is trading at an 11-day low around 1.1220.