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Data released by the European Union’s statistics agency on Wednesday showed that Eurozone industrial production returned to growth in August. Data showed that Eurozone factory output grew by 1.6 percent in August from July, better than the 1.5 percent expected. Data showed that Eurozone industrial production returned to expansion in August from the 0.7 percent drop recorded in the first month after the UK’s referendum.
Industrial production in the 19-member single currency bloc increased by 1.8 percent year-on-year, above the average forecasts of 1.1 percent in a Reuters poll. Durable consumer goods were the best performing sub-sector, rising 4.3 percent in August, with capital goods up 3.5 percent and energy output up 3.3 percent.
The Netherlands was the best performing major Eurozone economy, with growth hitting 4.4 percent, followed by Germany (3.1 per cent) and France (2 per cent). The pickup was another sign the single currency area has managed to shrug off immediate adverse effects from the UK’s Brexit vote.
The rise in production is unlikely to fully allay concerns among policy makers about the impact of Brexit on the Eurozone economy. However, data eases concerns about the immediate impact of the falling pound on Eurozone exports. The pound which has tumbled in the aftermath of Brexit vote was seen detrimental to Eurozone exports as it makes goods manufactured in the Eurozone more expensive for British buyers.
"Eurozone industrial production wiped out July’s losses but still, it does not look like European industry has managed to shift out of neutral. The picture of an economy that fails to pick up the pace persists and this industrial production reading fits that view,” said Bert Colijn, Senior Economist at ING.
