Feb preliminary: +0.5% m/m, -1.8% y/y

MNI survey median: -0.2% m/m, -1.6% y/y
MNI survey range: -1.0% to +0.6% m/m

January revision: flat m/m (+0.2%)
December revision: -0.9% m/m (-1.1%)
November: -0.4% m/m
October revision: flat m/m (+0.1%)
September: -2.6% m/m
—

PARIS (MNI) – Eurozone industry output surprised on the upside in
February, as a surge in energy production offset declines in most other
sectors, Eurostat said Thursday.

Taking into account the downward revision for January, the 0.5%
monthly upturn still left output some 10% below pre-crisis peaks and
two-month results 0.6% below the 4Q average.

As temperatures plunged in February, energy output spiked up 7.7%
for a 3.6% rise on the year. Capital goods output recovered 0.7%,
retracing less than half the slide since November for a 0.8% annual
gain. Intermediate goods output fell back 1.4% after a 0.6% upturn in
January and was 4.5% lower on the year. Consumer durables were down 2.0%
on the month and non-durables down 1.6%, giving annual declines of 6.4%
and 5.3%, respectively.

After a timid recovery through February, leading indicators for
Eurozone industry have taken a turn for the worst, reflecting the trend
in the larger economies apart from Italy.

Manufacturers polled by the European Commission in March reported
weaker domestic demand and were more pessimistic about near-term
production prospects. The factory PMI fell back 1.3 points in March to
47.7 as output contracted (48.7), new orders fell faster (45.4) and
order backlogs were depleted (45.2).

Fiscal tightening within the Eurozone, tougher borrowing conditions
and the retrenchment in public investment should continue to weigh on
domestic demand in the months ahead.

The latest joint projections by the national statistics institutes
of France and Italy and the leading private think tank in Germany
foresee Eurozone industry production dropping 0.7% in 1Q and 0.2% in 2Q.

German industry output dipped 0.2% in February and was 0.1% lower
on the year. Only capital and energy bucked the trend, national data
show. While the dynamism of foreign demand has been waning,
manufacturing orders from outside the Eurozone bounced back 5.0% in
February and firms continue to expect support from exports in the months
ahead, Ifo’s surveys show.

In France, output edged up 0.2% on the month, as a surge in energy
offset declines in most manufacturing branches here as well. Compared to
the previous-year level, output was down 1.3%. Leading indicators are
mixed. While the factory PMI plunged to a three-year low of 46.7 in
March, manufacturers polled by Insee were much more sanguine about
near-term prospects. The Bank of France estimated this week that
industry activity improved in March, but expected little further
expansion in the near term.

In Spain, production fell 0.5% in February after a 0.2% downturn in
January to end up 5.1% lower on the year. The PMI polls have been
sliding deeper into contraction territory since the start of the year
and production expectations fell back to a four-month low in March,
according to the Commission’s survey.

No data for Italy were released. While orders have been on a gentle
downward trend over the past six months, producers surveyed by Istat in
March hoped for an upturn in demand and output in the short term. The
factory PMI has recovered very gradually since October to 47.9 in March.

In other reporting countries, monthly production declines ranged
from 4.6% in Malta, 3.2% in Ireland and 2.3% in Greece to gains of 2.1%
in Finland, 2.8% in Slovakia and 13.0% in the Netherlands. Annual
comparisons gave increases only in Estonia (+1.3%), the Netherlands
(+6.7%) and Slovakia (+8.4%). The steepest annual declines were in
Greece (-8.5%), Malta (-11.4%) and Luxembourg (-14.4%).

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

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