Industrial output in the euro zone rebounded more than expected in August, becoming the latest indicator suggesting the economy has shaken off early Brexit-vote wobbles.
European Union statistical agency Eurostat said output climbed 1.6% on the month on a seasonally adjusted basis and rose 1.8% from a year earlier, after contracting by 0.7% and 0.5%, respectively, in July.
The figures exceeded consensus expectations for 1.1% month-on-month growth and a year-on-year expansion of 1.5% as output in four of Eurostat's five industrial categories increased. The production of durable consumer goods rose by 4.8% on the month, while capital goods output rose by 3.5%, more than offsetting a 1.7% contraction in capital goods output in July. The major euro zone economies of Germany, France, Italy and Spain all posted month-on-month growth above the 1.6% rate for the euro zone as a whole.
The mid-summer rebound chimes with positive industrial data from national statisticians in Germany, France and Italy and a buoyant prognosis from German industry as captured by the Ifo institute's closely watched barometers of business confidence in September.
But Capital Economics European economist Jack Allen noted that the 1.6% monthly output growth came from a stronger-than-expected July base, since Eurostat in Wednesday's report said July output shrunk by just 0.7% on the month, instead of the 1.1% it first estimated.
"Industry is unlikely to have provided a large boost to GDP in Q3," Allen noted. "Given the usual lag, industrial production might have declined again in September. And even if it flat-lined, the increase in industrial output in Q3 as a whole will have provided only a small contribution to GDP growth in Q3, just as it did in Q2."
He said the impact of the Brexit vote, and rising oil prices mean industry won't provide a major boost to the euro zone's stuttering recovery. Capital Economics predicts euro zone GDP growth could slow to 1% next year from 1.5% this year.
The euro was recently down 0.28% against the dollar at $1.1023. The yield on the 10-year German government bond was up 2 basis points at 0.04%.