October 12, 2012 / 9:08 AM / 8 years ago

Euro zone's strong factory output surprises in August

BRUSSELS (Reuters) - Output at euro zone factories grew much more than expected in August, helped by summer demand for food and French car production, but industry’s apparent resilience is unlikely to be enough to avoid a recession in the indebted region this year.

Industrial production in the 17 countries sharing the euro rose 0.6 percent in August from July, the EU’s statistics office Eurostat said on Friday, beating expectations of a 0.4 percent fall forecast by economists in a Reuters poll.

That was lifted by a strong showing in France and Italy, which along with Germany make up around two thirds of the euro zone’s industrial output.

Production of durable consumer goods such as cars and televisions jumped almost 4 percent in August, while non-durable goods output - drinks and processed food - rose 1.3 percent.

But industrial production in August is notoriously volatile as factories slow output or close altogether during the European summer holiday, meaning investors will be looking to figures from September onwards to get a real sense of the economy.

The International Monetary Fund forecasts a deeper-than-expected contraction of 0.4 percent in the euro zone this year as record unemployment, stubborn inflation and government austerity force households and businesses to drastically cut back. Despite hopes for a recovery next year, the IMF sees growth of just 0.2 percent in 2013.

That sober outlook was underscored by industrial production data on an annual basis, which fell 2.9 percent in August, the biggest drop in at least six months.

With governments cutting everything from pensions to defense spending across Europe to bring down their debts and deficits, Germany and France - the euro zone’s two largest economies - are finding it harder to find buyers for their products.

German industry output fell 1.6 percent in August on an annual basis and in Italy, there was a drop of 5.2 percent.

As the three-year euro zone crisis impacts business confidence across the world, the World Bank has also warned of a worsening slowdown in China, a major importer of European goods.

Reporting by Robin Emmott; Editing by Ben Deighton

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