Eurozone industrial uptick points to optimistic end to 2019

New figures released by European statistics office Eurostat point to a brighter end to 2019 for the Eurozone, which appears to have enjoyed a broad-based uptick in industrial production.

December saw industrial output expand 0.2% from the previous month after two months of contraction, Eurostat revealed on Wednesday.

“The fourth quarter is set up for another contraction in production,” said Bert Colijn, a senior economist at ING. “The industrial recession is set to continue for a little while longer but green shoots are noteworthy.”

The reported uptick was widespread, with Germany, the bloc's industrial powerhouse, reporting an expansion of 0.9% on the previous month. Spain's growth was also above the Eurozone average, and in Italy the figure swung positive and showed a weak improvement of 0.1% after months of contractions.

The only eurozone economy to report three months of uninterrupted growth was France.

The data was a “reminder that the French economy is doing fine”, said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.

However, the increase was not sufficient to move the sector's poor outlook for 2019 Q4. Despite a solid increase, Germany's auto sector's output was 10% below the level it was in November 2018.

Overall industrial output across the 19-member Eurozone was down 1.5% compared with the year before - an uninterrupted fall since November 2018. Output in the automotive sector was down by 7%.

In Germany, the Eurozone’s biggest economy and the one hit the most by the international industrial downturn, output was 4% below the level in November 2018. The German office for national statistics revealed on Wednesday that growth has slowed to 0.6% in 2019, from 1.5 per cent in 2018.

“While we still think that the bloc’s industry is gradually bottoming out, we call for caution against becoming overly optimistic,” said Daniela Ordóñez, economist at Oxford Economics. “A marked industrial pick-up should not be expected as external demand is set to remain subdued.”

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