October 14, 2019 / 9:06 AM / a month ago

Euro zone industrial output rebounds with capital goods boost

FILE PHOTO: A steel worker of Germany's industrial conglomerate ThyssenKrupp AG stands a mid of emitting sparks of raw iron from a blast furnace at Germany's largest steel factory in Duisburg, Germany. Picture taken January, 28, 2019. REUTERS/Wolfgang Rattay/File Photo

BRUSSELS (Reuters) - Euro zone industrial production rose in August by more than expected, official estimates showed on Monday, as factories invested more on machinery in a positive sign for the bloc’s economic outlook amid a largely gloomy outlook.

The European Union statistics agency Eurostat said industrial output in the 19-country bloc grew in August by 0.4% on the month, above the market consensus of a 0.3% rise.

The increase, only the third monthly increase in 2019, fully offset the 0.4% drop recorded in July.

The reading could reduce concerns about a slowdown of the euro zone economy in the third quarter. A first estimate of gross domestic product will be released by Eurostat on Oct. 31.

The euro zone economy grew by a mere 0.2% in the second quarter after expanding 0.4% in the first three months of the year. Growth could slow further in the third quarter, amid a manufacturing crisis in Germany, the bloc’s largest economy.

The IHS Markit’s Purchasing Managers’ Index (PMI), an indicator of economic sentiment, recorded in September the worst reading for Germany since 2009, when the global financial crisis plunged the country’s economy into recession.

But on a more positive note, Eurostat’s estimates showed on Monday a growing appetite for investment among factory managers. Production of capital goods, such as machinery, went up 1.2% on the month in August, after a 2.1% rise in July, pointing to an expansion of capacity.

Output also rose for intermediate goods, but dropped for durable and non-durable consumer products, in a sign that manufacturers may be expecting at least a short-term slowdown in sales.

Reporting by Francesco Guarascio @fraguarascio; editing by Philip Blenkinsop

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