Industrial output jump gives euro zone growth small boost

The euro zone’s vast industrial sector rebounded in June, giving overall growth a small boost to end an otherwise weak quarter on a positive note, data from Eurostat showed on Wednesday.

Industrial production in the 20 nations sharing the euro expanded by 0.5% on the month, beating expectations for a 0.2% rise, while gross domestic product was up 0.3% in the second quarter, unchanged on preliminary data, the EU’s statistics agency said.

Underlying growth was probably weaker, however, as data is distorted by a 3.3% jump in Irish GDP, which is driven by the oversized impact of big foreign companies based there for tax reasons.

In fact, the euro zone economy has broadly stagnated for the past three quarters, weighed down by a manufacturing recession and high costs for food and energy, with services and employment providing the few bright spots.

Recovery is also not yet in sight, with leading indicators suggesting stagnation for the quarters ahead, partly due to decades-high interest rates, which will make the European Central Bank extra careful in pushing up borrowing costs any further.

via Reuters