BRUSSELS (Reuters) - Euro zone industrial production declined in line with expectations in August, as the energy sector reversed gains made in July and only durable consumer goods output showed robust expansion.
Industrial output in the 19 countries sharing the euro fell by 0.5 percent month-on-month for a 0.9 percent year-on-year gain, Eurostat said on Wednesday. Economists polled by Reuters had expected a 0.5 percent monthly decline and a 1.8 percent annual gain.
Eurostat also revised data for July to a 0.8 percent monthly fall from an increase of 0.6 percent and to a 1.7 percent year-on-year rise from the previously reported 1.9 percent.
UniCredit economist Edoardo Campanella wrote in a note that the monthly contraction was due largely to a technical setback in Germany.
Industrial output shrank 1.1 percent in August in Germany, the bloc's largest economy, while in France, the second largest, production was 1.6 percent higher.
"It is still too early to assess the overall impact of the Volkswagen (DE:VOWG) scandal. Since ... (it) surfaced in mid-September, the next IP reading will provide only a preliminary and partial gauge of its effect," Campanella wrote.
He said business sentiment indicators in September were consistent with sustained moderate expansion in industrial activity despite sluggish global trade. Domestic demand, cheap energy prices and the weak euro were supportive.
ING's Bert Colijn said European industry seemed to be struggling: euro zone industrial production had grown by only 0.4 percent since last December.
However, he noted strong new orders, run-down inventories and the latest purchasing manager indices, saying that despite "concerns about China and Volkswagen ... the conditions for modestly improving production seem to be there."
Production of durable consumer goods grew 2.3 percent on the month in August. Intermediate goods output grew 0.2 percent.
By contrast, energy production fell by 3.0 percent in the month after a 2.1 percent rise in July, which economists attributed to a heatwave early that month, with air conditioning on overdrive.
For details of Eurostat data click on:
http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/