Euro zone industrial output declines, largely due to drop in energy

It has dampened the prospects of robust economic growth after bullish sentiment indicators

Eurozone industrial output declined in February, against market expectations of a slight increase, largely due a sharp drop of energy production, dampening prospects for robust economic growth after bullish sentiment indicators.

The European Union's statistics office Eurostat said on Tuesday that industrial production in the 19-country single currency bloc fell by 0.3 per cent from January, but rose by 1.2 per cent year-on-year.

Both figures were lower than market expectations of increases of 0.1 per cent in the month and of two per cent from a year earlier.

January's output numbers were also cut to 0.3 per cent month-on-month from an initially reported 0.9 per cent and to 0.2 per cent year-on-year from the 0.6 per cent published a month ago.

The tepid production numbers contrast with bullish sentiment indicators.

According to the Markit purchasing manager index, regarded as a good guide to growth, euro zone businesses enjoyed their best quarter in six years at the start of 2017.

Investor sentiment in the eurozone improved more than expected in April to remain at the highest level in almost 10 years, data from the Frankfurt-based Sentix research group said on Monday.

The February output decrease was largely due to a 4.7 per cent decline in energy production, perhaps reflecting mild weather, along with a 1.1 per cent fall in output of non-durable consumer goods, a wide category including fresh vegetables and clothing.

Output of intermediate goods went up by one per cent and of capital goods, such as machinery, by 0.9 per cent. Durable consumer goods production was flat.

At national level, industrial production in Germany, the bloc's largest economy, grew by 0.8 per cent, and in Italy by one per cent. However, it fell in France and Spain, by 1.6 and 0.3 per cent respectively.