Eurozone industrial production declined markedly in December, signaling an economic contraction at the end of 2011. Industrial production declined a seasonally adjusted 1.1 percent in December from a month ago, after staying flat in November, Eurostat said Tuesday. But, the decline was slightly smaller than an expected drop of 1.2 percent.
All sub-sectors logged contraction in December except durable consumer goods and non-durable consumer goods segments.
Production of energy fell at a faster pace of 2 percent, following a 0.2 percent drop in November. Capital goods production dipped 0.8 percent, offsetting the previous month's 0.2 percent growth. Intermediate goods output dropped by 0.7 percent after logging 0.5 percent expansion in the previous month.
At the same time, non-durable consumer goods remained stable, while production of durable consumer goods increased 0.2 percent. On a yearly basis, overall production decreased 2 percent in December compared to November's 0.1 percent rise. December's drop was steeper-than an expected 1.2 percent fall. Compared with 2010, the average production index increased by 3.5 percent in 2011.
Among the member states, industrial production fell in fifteen and rose in eight. The largest annual decreases were registered in Greece, Luxembourg and Portugal. Meanwhile, the largest increases were seen in Poland, the Czech Republic and Latvia.
The fourth quarter GDP data is due on February 15. Economists forecast the 17-nation currency bloc to contract 0.4 percent sequentially in the fourth quarter, reversing third quarter's 0.2 percent expansion.
The German economy is likely to avoid a technical recession in the first quarter of 2012, European Economist at Capital Economics, Ben May said. While this is a welcome development, the economist doubt that growth there will be strong enough to prompt an economic recovery in the euro-zone as a whole.
Germany's fourth quarter gross domestic product is estimated to have contracted by around 0.25 percent, dragging down the rate o