Eurozone official factory output surges in January

(BRUSSELS) - Factory output across continental Europe's core euro currency zone surged ahead in January, delighting analysts, although not enough to remove longer-term concerns.

Official statistics released by the European Union on Friday showed that industrial production in the 16 countries which share the euro rose by 1.7 percent compared to the previous month, and by 1.4 percent compared to 12 months earlier.

The respective figures for the full 27-nation bloc, which also includes eastern industrial powerhouse Poland, gave a 1.8-percent monthly rise and a 1.5 percent annual fall.

In December 2009, production had risen by an upwardly-revised 0.6 percent in the eurozone and 0.3 percent across the EU.

IHS Global Insight analyst Howard Archer said the news was "much stronger than expected" and "boosts hopes" that industrial output "can make a significant contribution" to first-quarter growth.

Highlighting a fall in the value of the euro against the dollar that will even make eurozone manufacturers "more competitive in their domestic markets," he nevertheless warned that the withdrawal of car scrappage incentives still weighs on medium-term prospects.

Clemente De Lucia of BNP Paribas added: "Industrial output is clearly rebounding after collapsing in the aftermath of financial distress."

However, he took a slightly more pessimistic view, warning that the "level of output will remain well below the pre-crisis level for a while. There is still a long road to recovery".

The detailed data showed 2.0-percent monthly growth across the eurozone for the production of durable consumer goods like fridges and televisions and an increase of 2.6 percent for energy.

On a monthly basis, production rose in 13 of the 19 member states for which information was available.

Country-specific data for the biggest players showed Germany bouncing back into the black with 1.6 percent January growth after posting a 0.9-percent fall in December.

France also leapt ahead with a 1.5-percent rise, reversing a 0.1-percent drop, while Poland's turnaround was even more substantial, turning a 3.2-percent fall into 2.5-percent growth.

Services-dominated Britain's factory output, however, contracted, falling by 0.3 percent after a 0.6-percent rise.

Economic growth in the 16 nations that share the euro single currency was a meagre 0.1 percent the fourth quarter of 2009, EU data agency Eurostat said earlier this month.

The European Commission has proposed 10-year targets for a new green, innovative economy, seeking to avoid the long-term "decline" of a bloc weakened by the global crisis and facing rising competition from emerging rivals, especially in Asia.

January 2010 compared with December 2009 - Industrial production up by 1.7% in euro area- Up by 1.8% in EU27 [Eurostat]