Eu­ro­zone wit­nesses big in­dus­trial re­bound in Aug

Kuwait Times - - BUSINESS -

In­dus­try looks set to give thirdquar­ter eco­nomic growth in the 19-coun­try eu­ro­zone a lift af­ter fig­ures yes­ter­day showed out­put up a whop­ping 1.6 per­cent in Au­gust alone.

The in­crease re­ported by Euro­stat, the Euro­pean Union’s statis­tics agency, more than off­set the pre­vi­ous month’s 0.7 per­cent de­cline. Ex­pec­ta­tions were al­ready high at 1.5 per­cent on ac­count of a 3.1 per­cent re­bound re­ported by Ger­many. The scale of the in­crease across the eu­ro­zonethe big­gest since Jan­uary - is wel­come news for a re­gion that has seen growth ease this year from a quar­terly rate of 0.6 per­cent in the first quar­ter to 0.3 per­cent in the sec­ond. Few econ­o­mists are ex­pect­ing a re­turn to the healthy first-quar­ter tick any­time soon - even af­ter the in­dus­trial pro­duc­tion fig­ures.

Still, there will be re­lief that the sec­tor, which when com­bined with con­struc­tion ac­counts for around a quar­ter of the eu­ro­zone’s GDP, looks set to help third-quar­ter growth. On a year-on-year ba­sis, Euro­stat said the sec­tor was 1.8 per­cent big­ger in Au­gust. The first es­ti­mate of over­all eco­nomic growth dur­ing the July to Septem­ber pe­riod will be pub­lished at the end of Oc­to­ber. Fears had been raised that growth would grind to a halt in the wake of Bri­tain’s vote to leave the EU in June.

Yes­ter­day’s fig­ures sug­gest that those con­cerns may have been over­done, though the sharp fall in the pound against the euro since the vote - par­tic­u­larly over the past week or so - is likely to weigh on eu­ro­zone ex­ports to Bri­tain in the months ahead. And un­cer­tain­ties over the fu­ture trad­ing re­la­tion­ship be­tween the EU and Bri­tain as well as con­cerns over the fu­ture of the EU it­self haven’t gone away, mean­ing the re­gion re­mains sus­cep­ti­ble to a drop in con­fi­dence. The in­dus­trial fig­ures also have a ten­dency to be vo­latile, so econ­o­mists are care­ful not to read too much into one month’s data. Many think the out­look for the sec­tor re­mains prob­lem­atic.

“With the im­pact of the UK’s Brexit vote weigh­ing on de­mand for eu­ro­zone ex­ports, and higher oil prices rais­ing man­u­fac­tur­ers’ costs, we do not ex­pect in­dus­try to pro­vide a ma­jor boost to the re­gion’s eco­nomic re­cov­ery,” said Jack Allen. — AP

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