March 12, 2020 / 10:14 AM / 24 days ago

Euro zone industry output jumped in January before virus blow

BRUSSELS (Reuters) - Euro zone industrial production leapt in January by far more than expected, official estimates released on Thursday show, in a sign that a recovery in the bloc was underway before the coronavirus began hitting the economy last month.

The European Union statistics office Eurostat said industry output in the 19-country single currency area was up by 2.3% month-on-month in January, when the United States and China signed an initial deal to cool trade tensions.

The rise was much higher than the average 1.4% increase forecast by economists polled by Reuters, and bouncing back from a 1.8% decline in production in December.

Among EU’s largest economies, Italy was the best performer in January with a 3.7% jump on the month, before the coronavirus outbreak began spreading in February.

Germany also posted a 2.7% rise in production while France’s output was up by 1.2%.

Factories were mostly ramping up production of intermediate goods, which rose by 3.2% on the month, in a sign that European manufacturers may have been looking to fill gaps in global supply chains caused by the initial outbreak of the virus in China.

Production of capital goods also leapt by 2.6% in January, an indicator of higher investments driven by then growing optimism among factory managers.

Compared to the previous year, industrial output was still down 1.9% in the euro zone, but far less than market expectations of a 3.1% decline and an improvement from December’s reading of -3.6%.

Reporting by Francesco Guarascio @fraguarascio; editing by Philip Blenkinsop

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