Industrial production jumps as eurozone economy powers on

Overall in 2017, eurozone GDP rose 2.5 percent, Eurostat said, the fastest growth rate since a 3.0 percent rise in 2007. (Reuters)
Updated 14 February 2018
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Industrial production jumps as eurozone economy powers on

BRUSSELS: Eurozone industrial production jumped more than expected in December, data from the EU statistics office Eurostat showed on Wednesday, underlining the fastest economic growth rate in a decade that economists expect to continue in 2018.
Eurostat said industrial production in the 19 countries sharing the euro rose 0.4 percent month-on-month for a 5.2 percent year-on-year gain. Economists polled by Reuters had expected a 0.2 percent monthly and 4.2 percent annual rise.
“The acceleration of production growth is unlikely to be a one-off as the outlook for industry remains rosy,” said Bert Colijn, senior eurozone economist at ING bank.
“Given the current backlog of work in industry, it is no surprise that hiring and investment in capital goods are high on the list of businesses. This adds to the strong economic picture for the start of 2018,” he said.
The statistics office also confirmed its earlier preliminary estimate of gross domestic product growth in the eurozone in the last three months of 2017 at 0.6 percent quarter-on-quarter and 2.7 percent against the same period of 2016.
Overall in 2017, eurozone GDP rose 2.5 percent, Eurostat said, the fastest growth rate since a 3.0 percent rise in 2007.
“Looking ahead, surveys suggest that the region’s upturn will gather pace,” said Stephen Brown, European economist at Capital Economics. “We expect the eurozone’s upturn to match last year’s strong pace in 2018, with annual GDP growth of 2.5 percent.”
The GDP of Germany, the eurozone’s biggest economy, grew 0.6 percent on the quarter and 2.9 percent year-on-year in the fourth quarter, with France at 0.6 percent and 2.4 percent respectively and Spain at 0.7 and 3.1 percent respectively.
“For the year 2018 as a whole, a strong increase of 2.5 percent is still likely, even if the statisticians have slightly revised previous data downwards,” Joerg Kraemer, chief economist at Commerzbank, said in a note on Germany.
“We continue to believe that the upswing could continue for another two or three years despite the roll-back of labor market reforms because cyclical tensions on the labor market are not yet in sight,” he said.
Eurostat also revised upwards November production figures to 1.3 percent month-on-month from 1.0 percent and to 3.7 percent year-on-year from 3.2 percent.
The production surge was fueled by durable consumer goods such as refrigerators and TV sets, the output of which jumped 2.7 percent on the month in December and was 7.4 percent higher than a year earlier.
The output of intermediate goods — like parts for their production — jumped 1.4 percent for a 6.6 percent annual gain.
The production of capital goods rose 7.6 percent year-on-year in December, accelerating from 6.7 percent in the previous month, indicating that investment was picking up too.


Oil edges up on Saudi output cut and Iran sanctions

Updated 8 min 3 sec ago
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Oil edges up on Saudi output cut and Iran sanctions

  • The cut comes amid expected export declines from Iran once the US re-imposes sanctions on Tehran
  • The OPEC report said it expected world oil demand to grow by 1.43 million bpd in 2019, down from 1.64 million bpd in 2018

SINGAPORE: Oil prices inched up on Tuesday after a report from OPEC confirmed that top exporter Saudi Arabia had cut production to avert looming oversupply, although concerns over a slowdown in economic growth kept a lid on markets.
Front-month Brent crude oil futures were at $72.85 per barrel at 0658 GMT, up 25 cents, or 0.3 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were up 25 cents, or 0.4 percent, at $67.45 per barrel.
In July, Saudi Arabia told the producer group of the Organization of the Petroleum Exporting Countries (OPEC) that it had curbed production by 200,000 barrels per day (bpd) to 10.288 million bpd.
The cut comes amid expected export declines from Iran once the US re-imposes sanctions on Tehran’s petroleum industry from November.
OPEC’s monthly report published on Monday, which uses data from secondary sources, confirmed the Saudi cut, which traders said triggered crude’s upward move early on Tuesday.
That came despite the Saudi move coming in anticipation of a slowdown in oil demand.
The OPEC report said it expected world oil demand to grow by 1.43 million bpd in 2019, down from 1.64 million bpd in 2018.
OPEC said the demand slowdown would come on the back of potentially lower economic growth as a result of trade disputes between the United States and China as well as emerging market turmoil.
China’s economy is showing further signs of cooling as the US prepares to impose even tougher trade tariffs, with investment in the first seven months of the year slowing to a record low and retail sales softening, data showed on Tuesday.
“Data from China failed to meet market expectations, which could be another signal that the world economy is slowing down,” said Sukrit Vijayakar.