Euro Zone Production Contracted in April

Eurostat announced today that industrial production in the euro zone fell 0.8 percent month-to-month in April, the steepest decline in four months, after a 0.1 percent contraction in March.

In April, compared with the same month of 2011, production in the euro zone fell 2.3 percent—the biggest annual drop since December 2009.

Germany suffered its biggest drop in factory output in seven months, while Portugal saw output fall at its fastest monthly pace since Eurostat records began in 2000. Bailed-out stricken Greece had a modest 0.3 percent increase in factory output in April from March.

Production of capital goods, such as machinery, fell 2.6 percent, the fastest rate since September 2011 across the 17-nations bloc. A stronger fall in overall industrial production in April was slightly mitigated by a 6.9 percent increase in energy output.

Decline in factory output is a sign of slower economic activity. April being the first month of the second quarter with a weaker reading for factory output will add to concerns that the euro zone is heading into recession. The bloc, sharing the euro, posted zero growth in gross domestic product in the first quarter, barely avoiding a recession after its 0.3 percent decline in economic output in the last three months of 2011.

Source: Wall Street Journal

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Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.