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Euro zone industry stumbles in May

Published 14/07/2014, 10:28
Euro zone industry stumbles in May

BRUSSELS (Reuters) - Euro zone industrial production dropped sharply in May with the energy sector the only one to thrive, data showed on Monday, highlighting the fragile state of the bloc's recovery.

Output in the 18 countries sharing the euro dropped 1.1 percent on the month in May, following a 0.7 percent rise in April, the European Union's statistics office Eurostat said.

Analysts surveyed by Reuters had expected a 1.2 percent monthly fall in May.

Compared with the same period in 2013, factory gate output grew in line with market expectations by 0.5 percent after a 1.4 percent rise in April.

The month-on-month decline was led by a 2.4 percent fall in production of intermediate goods - such as parts used for cars. There was a 2.2 percent drop in the production of non-durable items such as food or cosmetics.

The energy sector was the only one to grow, showing a 3 percent increase after a 1.2 percent growth in April.

Industrial production in the euro zone's three biggest economies - Germany, France and Italy - fell month-on-month. Germany saw the biggest drop since May 2013 with a 1.4 percent fall.

France, with a 1.3 percent decline, recorded the steepest fall in production since June 2013 and Italy's production registered its worst performance since November 2012 with a 1.2 percent drop.

Germany's faltering economy has cast further doubt over the euro zone's prospects for recovery this year, with no other big country strong enough to pick up the slack.

Since late last year the 9.6 trillion euro (7.6 trillion pounds) economy has been climbing steadily out of a two-year recession, but any rebound is being hindered by continued austerity, joblessness and uneasy markets.

Investors will look to the July ZEW German survey on economic sentiment on Tuesday to see how great the impact of the crisis in Ukraine has been on confidence in Germany.

Mario Draghi, head of the European Central Bank, will speak to lawmakers in the European Parliament later on Monday and may shed light on his thinking.

(Reporting by Martin Santa; editing by John O'Donnell)

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