Sept preliminary: -2.5% m/m, -2.3% y/y

MNI survey median: -1.9% m/m, -2.5% y/y
MNI survey range: -2.5% to +0.6% m/m

August revision: +0.9% m/m (+0.6%)
July revision: +0.5% m/m (+0.6%)
June revision: -0.4% m/m (-0.5%)
May revision: +0.9% m/m (+1.0%)
April unrevised: -1.0% m/m
—

PARIS (MNI) – Eurozone industry output fell back more than
generally expected in September to a two-year low, with marked declines
in most economies, Eurostat said Wednesday.

The 2.5% monthly downturn left production 2.3% lower on the year
and more than 10% below pre-crisis levels. Moderate gains in July and
August assured a 0.3% recovery in 3Q after two quarters of 0.5% decline.

Many analysts had expected a marked correction in September since
the solid gains in several large economies in August looked too good to
last.

(Workday-adjusted data taking account of two fewer workdays in
September, by contrast, gave a sharp monthly rebound to the highest
level in six months.)

All categories posted declines in September: intermediate goods
(-2.0%), capital goods (-3.0%), consumer durables (-4.3%), non-durables
(-2.8%) and energy (-1.8%). Annual comparisons showed capital goods
holding up best (-0.8%) and intermediate goods hit hardest (-4.0%).

Leading indicators continue to point to sluggish activity ahead.
Even if the PMI polls appear to have lost some of their predictive
value, they remain far below the threshold for expansion for the
Eurozone as a whole (45.4) and the larger economies.

In a broader survey by the European Commission, manufacturing
sentiment sunk to a three-month low in October, undermined by ever
thinner order books and weaker output expectations. Last month, the
national statistics offices of France and Italy and Germany’s Ifo think
tank projected an industry decline of 0.4% in 4Q and an anemic recovery
of 0.2% in 1Q.

German industry output dropped 2.1% in September, led by a sharp
fall for capital goods. Producers polled by the Ifo institute in October
confirmed the marked erosion in business conditions in recent months and
were only slightly less pessimistic about medium-term prospects in light
of fading foreign demand.

French industry also surprised to the downside in September with a
2.7% setback accentuated by the skid in the auto industry and the
temporary shutdown of a large refinery. Under pressure from producers
and unions to stem the decline in industry, the government has come up
with a number of measures to help producers regain competitiveness,
including a E20 billion rebate on business taxes over the next three
years. However, little real impact can be expected in the near term.

Production in Italy fell back 1.5% in September from a 1.7% rebound
in August. Sector sentiment has stabilized since spring around lows last
seen three years ago, according to Istat’s surveys; producers’
assessment of orders do not point to any recovery in the near term.

In Spain, output dropped 2.8% after a 1.6% jump in August. Reviving
export growth has so far been unable to offset the slump in domestic
demand throttled by fiscal consolidation and high unemployment. Sector
sentiment has fallen back to lows seen nearly three years ago and
producers’ assessment of total orders has been on a downward trend since
February, according to the Commission’s survey.

Nearly all of the smaller reporting countries contributed to the
contraction in September, with monthly declines led by Ireland (-12.6%)
and Portugal (-12.0%), followed by Greece (-4.4%), Slovenia (-2.3%),
Malta (-1.7%) and Luxembourg (-0.9%). The only gains were in Slovakia
(+1.4%) and Estonia (+2.0%). Output was unchanged in the Netherlands.

–Paris newsroom +331 4271 5540; e-mail: ssandelius@mni-news.com

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