* Industrial production slides 2.5 pct in September
* Euro zone economy expected to show contraction in 3rd qtr
By Robin Emmott
BRUSSELS, Nov 14 Output from euro zone factories
in September took its steepest fall since January 2009, dragged
down by German industry's loss of resilience after three years
of crisis in Europe.
Industrial production in the 17 countries sharing the euro
fell 2.5 percent in September from August, the EU's statistics
office Eurostat said on Wednesday, worse than the 1.9 percent
fall forecast by economists in a Reuters poll.
The performance was the weakest on a monthly basis since
January 2009, when factory output fell 4.0 percent as the global
financial crisis drove major economies into recession.
Economists see the euro zone, which accounts for almost a
fifth of global output, ending 2012 in its second recession in
three years, as the debt crisis that began in Greece three years
ago saps confidence and pushes joblessness to a record level.
Growth is still not expected to return in 2013 as households
and governments continue to cut back to overcome one of Europe's
biggest economic crises in more than half a century.
"September's plunge in euro zone industrial production
provides firm evidence that the economic outlook in the region
is continuing to deteriorate," said Ben May, an economist at
Capital Economics in London.
Germany's industrial output, which is the engine of Europe's
largest economy, fell by 2.1 percent in September, showing that
the country is no longer immune to the crisis.
Germany, France and Italy deliver around two thirds of the
euro zone's industrial output, and production fell 2.7 percent
in France and 1.5 percent in Italy in September from August.
The euro zone's 9.4 trillion euro ($12 trillion) economy is
likely to have contracted in the third quarter, Eurostat data is
expected to show on Thursday, and business surveys for October
show companies continuing to reduce investment as orders fall.
The European Commission has forecast the bloc's economy will
shrink 0.4 percent in all of 2012, with just 0.1 percent growth
"Fourth-quarter gross domestic product is likely to witness
a renewed intensification of the recession," said Marco Valli,
chief euro zone economist at UniCredit in Milan.
NO EASY RECOVERY
EU officials say the euro zone is finally starting to heal
from the implosion of a decade-long, credit-fueled boom as
labour costs fall and exports begin to rise.
The European Central Bank's promise of a bond-buying
programme for euro zone countries who apply for help from the
bloc's permanent rescue fund has also tempted foreign investors
back into sovereign debt markets.
But the reality for many companies is of falling demand for
their goods, stalled bank lending, stubborn inflation and
governments still steeped in debt, all perpetuating a reluctance
to invest and hang on to staff.
Ford Motor Co plans to close three factories and scrap
6,200 jobs in Europe, while Spanish airline Iberia is to cut
almost a quarter of its workforce. Other companies as diverse as
telecoms group Ericsson, bank ING, steel group Kloeckner and
engineering firm Bombardier have announced job cuts.
"Euro zone manufacturers are clearly still finding life
extremely difficult," said Howard Archer, chief European
economist at IHS Global Insight in London.
"Domestic demand is being handicapped by tighter fiscal
policy in many countries, limited consumer purchasing power, and
high and rising unemployment," he said.