bloomberg.com //
By Jeffrey T. Lewis
Brussels, Aug. 20 (Bloomberg) -- European industrial production rose for the first month in three in June, as companies made more consumer goods such as refrigerators and televisions.
Factories, farms and mines in the dozen countries sharing the euro increased output by 0.5 percent in the month, the European statistics office said. Economists had predicted a gain of 0.6 percent. From a year ago, production fell 1.2 percent.
``There are some positive signs in the economy, but they're weak,'' said Giovanni Dell'Aria Burani, chairman of Reno de Medici SpA, an Italian cardboard maker and paper company. Stock market declines ``certainly aren't helping,'' he added.
The European Commission earlier this month trimmed its forecast for third-quarter economic growth in the euro countries by a 10th of a percentage point after stock markets slumped. The Bloomberg European 500 stock index has fallen 21 percent this year.
Shoppers are growing more reluctant to part with their cash because of rising unemployment. The European unemployment rate rose to its highest level in two years in June. Companies including Fiat SpA and Siemens AG have shed more than a quarter of a million jobs this year, according to Credit Suisse First Boston.
Production of consumer goods such as household appliances rose 1.3 percent in the month. Energy output rose 1.4 percent. May production was revised to unchanged from an 0.1 percent increase.
Germany

Germany, which accounts for almost a third of the region's economy, barely grew in the second quarter as strikes hurt production, the Bundesbank said yesterday.
The increase in European output was driven by a 1.7 percent jump in Germany, as manufacturers sought to make up for a slump in May caused by metalworkers' strikes at companies including DaimlerChrysler AG. At the same time, factory orders fell in June as international orders plunged, suggesting manufacturing may have declined again last month.
``The economy may have hit bottom, but that doesn't mean it will now expand quickly,'' said Armijn Eikelboom, who helps manage 1.2 billion euros in fixed-income at Kempen Capital Management in Amsterdam. Growth ``will be moderate because of the economic situation in Germany and the U.S.,'' he said.
About a fifth of European exports go to the U.S., where economic growth slowed to 1.1 percent in the second quarter from 5 percent in the previous three months. Exports to the U.S. have also been made more expensive by the euro's 10 percent rise against the dollar this year.
``Things will remain stagnant for the next several months,'' said Mario Carraro, chief executive officer of Padova, Italy-based Carraro SpA, which makes transmission systems for companies including Deere & Co. and Caterpillar Inc. Carrero added he's ``cautiously optimistic'' for this year.
Very Hesitant

Others are more pessimistic. Buderus AG, Europe's second- biggest maker of boilers and heaters, may miss its 2002 earnings target amid the worst year for the German heating market in a decade, Chief Executive Uwe Lueders said last week.
``People, especially private households, are very hesitant to invest in cars, furniture, all kind of long lasting goods,'' he said.
With inflation in the euro countries under control, the European Central Bank is probably paying more attention to industrial production, analysts said.
Inflation remained below the ECB's 2 percent limit for a second month in July. The central bank has left its benchmark interest rate unchanged at 3.25 percent since November, and is likely to leave it there for several more months.
``The ECB is probably somewhat worried about the economic situation, though for the time being not enough to cut interest rates,'' said Otmar Lang, an economist at Deutsche Bank AG in Frankfurt.
Flooding last week and this week in Germany and central Europe will further damage the economy, though reconstruction efforts will probably provide a boost in coming months, investors said.
``There will be a huge spending program to fix the flood damage, and that will provide a big impulse for the economy,'' said Bernd Pursteiner, who helps manage more than 2.5 billion euros billion euros at DG Capital Management in Frankfurt.
The European Union has pledged aid to member and prospective member countries to help rebuild areas affected by the flooding, though the amount of money to be given hasn't been revealed.