Euro zone industrial output drops sharply

Brussels - Euro zone industrial output fell at its steepest monthly rate in more than a year in October, highlighting the fragility of the bloc's economic recovery and supporting the case for further central bank stimulus.

The €9.5trn regional economy emerged from recession in the second quarter but growth almost ground to a halt again in the third and the outlook is clouded by record high unemployment and weak consumer and business confidence.

Industrial production in the 17 countries using the single currency dropped 1.1% on the month, its biggest monthly decline since September 2012, the data from EU statistics agency Eurostat showed.

Analysts polled had expected a 0.3% rise after a revised 0.2% drop in September. Data showing a 1.2% drop in industrial output in the region's dominant economy Germany was released on Monday.

Pressures

An economist at ING, Martin van Vliet said: "All in all, the latest industrial production figures clearly highlight the bumpy and fragile nature of the euro zone's economic recovery.

 "With euro zone growth seemingly stuck in low gear dis-inflationary pressures will persist, thereby keeping the possibility of further ECB action very much alive."

The European Central Bank cut interest rates to a record low of 0.25% in November in reaction a sharp fall in inflation and the weak recovery, with the bank saying it stood ready for further action to shield the rebound and keep inflation on the projected path.

A spokesperson for the EU executive, the European Commission, said a variety of indicators needed to be taken into account when assessing the state of the economy, which it remained confident was at "(the) beginning of a solid recovery".

Year on year, output rose 0.2% in October.