Eurozone Factory Output Jumped in May
By Paul Hannon
Factory output across the eurozone rose sharply in May, a sign that the currency area's manufacturing sector may be leveling off after a long slowdown.
The European Union's statistics agency Friday said industrial production in the 19 countries that use the euro was 0.9% higher than in April, a surprisingly large rise.
The increase in output was driven by the production of consumer goods, and led by France, which saw a 2.1% rise from the previous month.
However, production was still down 0.5% on May 2018, a reflection of the weak performance over the past 12 months as demand for the eurozone's exports has cooled.
Industrial production is volatile from one month to the next, and a larger rise in output in January proved to be a false dawn. But the May pickup suggests the eurozone is likely to avoid a recession over coming months.
The performance of the manufacturing sector is key to the European Central Bank's future policy decisions. Policy makers have signaled that they stand ready to cut their key interest rate or restart their bond purchases if there are signs that weakness in the sector is dragging down the rest of the economy.
With the outlook for world trade flows uncertain amid continuing tensions between the U.S. and China, a single month of improvement in the manufacturing sector may not be sufficient to allay the ECB's concerns. Surveys of purchasing managers indicate that manufacturing activity declined in the three months through June, with new export orders remaining weak.
Write to Paul Hannon at firstname.lastname@example.org
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