Eurozone industrial output lifts for second month

Factory output across the 18 countries that share the euro rose for the second straight month in October, albeit at a modest pace. The European Union's statistics agency said on Friday that production by factories, mines and utilities during October was up 0.1 per cent from September, and 0.7 per cent from the same month in 2013. That was a smaller rise than economists had expected, since the median forecast of 18 surveyed by The Wall Street Journal last week was for an increase of 0.2 per cent on the month. Eurostat also said on Friday that the number of people in work rose by 0.2 per cent in the third quarter, down from the 0.3 per cent rate of increase recorded for the three months to June. However, employment and industrial production remain well below their pre-crisis levels and there is no indication that the eurozone's recovery is set to accelerate to a pace that would quickly create large numbers of new jobs or end a long period of very low inflation. The eurozone economy picked up slightly in the third quarter, growing by 0.2 per cent compared with a 0.1 per cent expansion in the three months to June. But its performance in 2014 has been weaker than hoped for, and economists at the European Central Bank see that continuing into next year, having this month cut their 2015 growth forecast to 1.0 per cent, from 1.6 per cent when they last released projections in September. A survey of purchasing managers at 3,0000 manufacturing companies released last week indicated that growth in manufacturing activity ground to a halt in November, and other indicators also suggest the eurozone economy has remained weak in the final quarter of the year. ECB President Mario Draghi said last week that officials will reassess their existing stimulus policies, which include cheap bank loans and purchases of asset-backed securities and covered bonds, in early 2015 and decide whether to do more to ensure that annual inflation moves closer to its target of just below 2 per cent. Many analysts expect the ECB to announce a government bond purchase plan as soon as its January 22 meeting, a forecast reinforced by weak demand for the second installment of a four-year lending program for banks on Thursday.

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