August 13, 2014 / 9:02 AM / 3 years ago

Unexpected drop in euro zone output clouds recovery hopes further

* June industrial production undershoots expectations
    * Falls m/m, flat y/y as recovery struggles to take hold
    * Three biggest economies rise month-on-month
    * German output drops year-on-year

    BRUSSELS, Aug 13 (Reuters) - Euro zone industrial production
contracted unexpectedly for a second month in a row in June,
further denting hopes of a stronger recovery as the bloc starts
to take the hit from conflict in Iraq, Ukraine and Gaza, data
showed on Wednesday.
    Output at factory gates single currency bloc fell 0.3
percent on the month in June after a 1.1 percent drop in May,
against market expectations of a 0.3 percent rise.
    When compared with the same period of last year, production
was flat, following an upwardly revised 0.6 percent rise in May,
while economists polled by Reuters expected a 0.1 percent annual
increase in June.
    It was the lowest annual reading since August 2013.
    The monthly drop was due mainly to a 1.9 percent drop in
production of non-durable consumer goods, down for a second
consecutive month and 0.7 percent fall in energy production,
which was up in the previous three months.
    Economic recovery in the 9.6 trillion euro economy is
struggling to gain momentum a year after exiting a recession,
throttled by combination of high unemployment, sluggish reform
the fallout from conflict in Ukraine, Gaza and Iraq.

 (Reporting by Martin Santa; Editing by Louise Ireland)
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