European industry rebounds after Brexit blip
Frankfurt (AFP): RECASTS to include France, Spain and Britain AMENDS slug.
Industrial output surged in August in three of the eurozone’s top economies, data released Friday showed, providing evidence to of a rebound from the Brexit vote shock.
Meanwhile output unexpectedly dropped in Britain after having initially held up following the June vote to leave the European Union.
Industrial production in Germany, Europe’s biggest economy, shot up 2.5 percent higher in August from July, when it tumbled by 1.5 percent, according to data from the federal statistics office Destatis corrected for price, seasonal, and calendar effects.
Analysts surveyed by Factset had predicted an increase of just 1.0 percent.
Meanwhile in France, industrial output jumped 2.1 percent in August, having slid 0.5 percent in July, the French statistics office Insee said.
In Spain, industrial output climbed 1.4 percent after having been essentially flat in July, according to data from Ine.
The results suggest “the initial Brexit shock has been digested” in the wake of Britain’s June 23 vote to quit the EU, analyst Carsten Brzeski at ING Diba bank said after the German figures were released.
“The outlook for the third quarter all of a sudden looks much brighter,” he added.
Meanwhile economist Stephen Brown at Capital Economics said that sharp rises “suggest that industry might contribute positively to eurozone GDP growth” in the third quarter.
He called the strong numbers from France and Spain a surprise, noting that the conensus forecast had been for a 0.7 percent gain in France and a 0.1 percent dip in Spain.
The data provides hard evidence to back up surveys of businesses that pointed to quick recovery for the European economy, although analysts have warned of a further impact as Brexit negotiations approach and get underway next year.
Britain’s finance minister Philip Hammond warned earlier this week of “some turbulence as we go through this negotiating process”.
Comments by British Prime Minister Theresa May and European leaders this week suggesting a toughening of positions towards a “hard” Brexit that would see Britain lose access to the EU single market has sent the pound to 31-year lows.
Meanwhile industral output in Britain contracted by 0.4 percent in August, after having edged up 0.1 percent in July, data released by the ONS on Friday showed. That counfounded expectations of analysts surveyed by Bloomberg who had expected an increase of 0.1 percent.
However the British manufacturing sector still increased by 0.2 percent, with the overall drop due to the energy sector which has been suffering from low global crude prices.