RSG Admin
06-12-2009, 05:54 AM
By Ralph Atkins in Frankfurt
June 12 2009
http://www.ft.com/cms/s/0/95f93438-5736-11de-8c47-00144feabdc0.html
Eurozone economic recovery hopes have been set back by an unexpectedly sharp fall in industrial production that suggests continental Europe’s recession is only slowly losing its ferocity.
Industrial production in the 16-country region tumbled by 1.9 per cent in April, further extending the precipitous falls since the second half of last year, according to Eurostat, the European Union’s statistical office. Compared with April 2008, production was 21.6 per cent lower – the steepest year-on-year fall since record began in January 1991.
Eurozone economies proved especially vulnerable to the collapse in global demand late last year, but recent forward-looking purchasing managers’ indices have suggested that the downturn was losing its intensity.
Economists pointed out that the latest fall in industrial production was noticeably less severe than around the turn of the year, and that other “hard” data – for instance, German industrial orders figures – have shown a marked improvement.
Still, the sharp contraction in activity has left the eurozone economy badly wounded. Industrial production in April was down to a level not seen for almost 12 years, and the latest monthly fall offered scant hope of an early return to economic growth.
“We are definitely in the recovery phase but today’s data confirm that it will be fragile and there will be negative surprises,” said Marco Annunziata, chief economist at Unicredit. “Policymakers should not be in any hurry to withdraw [economic] policy stimulus.”
Eurozone gross domestic product contracted by 2.5 per cent in the first quarter – faster than in the US or UK, and the European Central Bank warned again this week that a return to positive quarterly growth rates was not expected until the middle of next year.
The ECB believes conditions in financial markets have improved noticeably. On Friday it reported that banks had deposited just €7.7bn in its “deposit facility” – which during last year’s market paralysis was used to park funds rather than lend to other banks. That was down from a peak of more than €300bn.
However, the continuing weakness of the European banking sector is expected by economists to act as a drag on eurozone growth. At the same time, the collapse in industrial production is only slowly feeding through into higher unemployment – which over the coming months is also expected to act as a brake on growth.
June 12 2009
http://www.ft.com/cms/s/0/95f93438-5736-11de-8c47-00144feabdc0.html
Eurozone economic recovery hopes have been set back by an unexpectedly sharp fall in industrial production that suggests continental Europe’s recession is only slowly losing its ferocity.
Industrial production in the 16-country region tumbled by 1.9 per cent in April, further extending the precipitous falls since the second half of last year, according to Eurostat, the European Union’s statistical office. Compared with April 2008, production was 21.6 per cent lower – the steepest year-on-year fall since record began in January 1991.
Eurozone economies proved especially vulnerable to the collapse in global demand late last year, but recent forward-looking purchasing managers’ indices have suggested that the downturn was losing its intensity.
Economists pointed out that the latest fall in industrial production was noticeably less severe than around the turn of the year, and that other “hard” data – for instance, German industrial orders figures – have shown a marked improvement.
Still, the sharp contraction in activity has left the eurozone economy badly wounded. Industrial production in April was down to a level not seen for almost 12 years, and the latest monthly fall offered scant hope of an early return to economic growth.
“We are definitely in the recovery phase but today’s data confirm that it will be fragile and there will be negative surprises,” said Marco Annunziata, chief economist at Unicredit. “Policymakers should not be in any hurry to withdraw [economic] policy stimulus.”
Eurozone gross domestic product contracted by 2.5 per cent in the first quarter – faster than in the US or UK, and the European Central Bank warned again this week that a return to positive quarterly growth rates was not expected until the middle of next year.
The ECB believes conditions in financial markets have improved noticeably. On Friday it reported that banks had deposited just €7.7bn in its “deposit facility” – which during last year’s market paralysis was used to park funds rather than lend to other banks. That was down from a peak of more than €300bn.
However, the continuing weakness of the European banking sector is expected by economists to act as a drag on eurozone growth. At the same time, the collapse in industrial production is only slowly feeding through into higher unemployment – which over the coming months is also expected to act as a brake on growth.