March: +1.3% m/m, +6.9% y/y

MNI survey median: +1.0% m/m, +6.4% y/y
MNI survey range: +0.1% to +1.5% m/m

February: +0.7% m/m (revised from +0.9%)
January: +1.9% m/m (revised from +1.6%)
December: +0.8% m/m (unrevised)
November: +1.3% m/m (unrevised)
October: +0.3% m/m (unrevised)
—

FRANKFURT (MNI) – Industrial production in the Eurozone continued
expanding in March, beating general expectations and extending its
string of consecutive increases to 10 months, Eurostat reported on
Wednesday.

The March gain left output up on the quarter, suggesting a positive
contribution from industry to GDP in 1Q.

On the month, output increased 1.3%, leaving the annual change at
+6.9%. Factoring in previous revisions, production in 1Q was up 3.8%
from the fourth quarter of 2009.

In 4Q, industry had contributed nothing to Eurozone GDP growth,
leaving economic activity unchanged on the quarter following 3Q’s 0.4%
rebound. The preliminary estimate for EMU 1Q GDP is scheduled for
release today at the same time as this report.

Capital goods production posted the strongest month-on-month gain
(+1.5% m/m, +4.5% y/y), followed by non-durable consumer goods output
(+1.2% m/m, +4.6% y/y), durable consumer goods (+0.6% m/m, +2.2% y/y)
and intermediate goods production (+0.5% m/m, +11.7% y/y).

Conversely, output of energy goods continued to contract, falling
0.6% on the month in March and leaving the annual rise at 4.9%.

According to the April’s purchasing managers index (PMI), broad
gains across Eurozone states, with record jumps in both Germany and
Austria, helped to lift the manufacturing PMI (57.6) to its highest
level since June 2006.

Echoing the PMI report, firms cited by the European Commission grew
less pessimistic in April, with production expectations remaining well
above the long-run average and both selling-prices expectations and
order books reassessed upwards.

The latest joint projections published by the French national
statistics office and the leading institutes in Germany and Italy point
to industrial output increasing by 0.8% in both 2Q and 3Q after
rebounding 2.2% in the first quarter of 2010.

Boosted by a significant rebound in construction, industrial
production in Germany jumped 2.6% on the month in March, leaving output
up 9.1% on the year. Greater investment in public infrastructure due to
Germany’s fiscal stimulus program is likely to support construction
further this year.

However, firms responding to the Ifo institute’s sentiment survey
in April grew increasingly pessimistic regarding the construction
sector, with the majority of respondents expecting activity to trend
below normal over the next six months.

Production in France also surprised to the upside, rising 1.0% from
February (+6.4% y/y), as moderate gains across most sectors more than
offset the decline in automobiles, Insee reported earlier this week.

Like firms in Germany, French manufacturers downwardly reassessed
the business climate, bringing it back to its lowest level in four
months, the Bank of France noted in its industry and services survey.

Nevertheless, the French firms reported that order books remained
close to normal levels, with a majority of respondents expecting
production to continue growing in both April and May. “Forecasts for the
coming months continued to point on average to a slight rise in
activity,” the central bank said.

Italian industrial production lost ground in March, falling 0.1% on
the month after adjustment for the number of work days. However, due to
base effects, the annual change came to +6.4%, the strongest gain in
almost two years.

Looking ahead, manufacturers’ morale in Italy continued to
strengthen in April, with gains noted across all industrial sectors,
extending the run of improving sentiment to seven months and lifting the
indicator to its highest level since June 2008, the ISAE economic
research institute reported late last month.

According to the survey results, firms were more optimistic
regarding total orders on the month, with the assessment of foreign
demand reaching pre-Lehman levels.

Spanish industrial production was up 2.1%, leaving output 5.4%
higher on the year.

–Frankfurt bureau tel.: +49-69-720142. Email: frankfurt@marketnews.com

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