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Industrial output data raises chance Eurozone averted contraction in Q3 – ING

FXStreet (Barcelona) - Martin Van Vliet, senior euro-area economist at ING sees the industrial production report for September reinforcing their belief that the Eurozone economy skirted contraction in the third quarter.

Key Quotes

“The 0.6% monthly increase in industrial output in September was slightly lower than had been expected (consensus: +0.7%), but the sharp decline in August was revised upwards from -1.8% MoM to -1.4% MoM, making this, on balance, a not-too-bad report. That said, the industrial sector still acted as a drag on Eurozone GDP in the third quarter, with production in Q3 as a whole falling by 0.4% QoQ, shaving almost 0.1 percentage point off GDP.”

“Fortunately, the larger services sector has fared better and should have contributed positively to GDP growth."

"On balance, we have pencilled in Eurozone GDP growth of 0.1% QoQ for Q3 – the same as the revised growth rate for the second quarter. Such growth obviously is still unacceptably low — i.e. way too low to make a serious dent in unemployment."

"Indeed, the Eurozone economy needs quarterly growth of around 0.25% (non-annualised) to create jobs. With countries with ample fiscal space unwilling to provide meaningful fiscal stimulus, the onus very much remains on the ECB’s monetary policy and the exchange rate to generate such faster growth.”

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