Eurozone economic growth faces revision as industry retreats

LONDON – Economic growth across the 19-country eurozone in the first quarter of the year risks being revised lower after official figures Thursday showed industrial production fell by a greater than anticipated 0.8 per cent in March.

Eurostat, the European Union’s statistics agency, said the monthly fall was broad-based, with only energy production posting an increase. March’s decline also follows a big 1.2 per cent decline in February and means that much of the 2.4 per cent surge in January has been erased.

The decline was more than the 0.2 per cent fall predicted in markets and raises the possibility that the estimate for first-quarter economic growth will be trimmed in a revision due Friday. After all, one of the reasons why the first estimate came in at a strong quarterly rate of 0.6 per cent was largely due to the strong industrial production increase in January.

Analysts said the poor showing over the past couple of months is further evidence that the eurozone is facing a softer economic outlook in light of a number of factors, including uncertainty over the state of the global economic recovery, emanating in particular from the slowdown in China.

“Today’s data and the ongoing weakness of industrial surveys support our view that overall eurozone economic growth is set to slow from 1.5 per cent last year to about 1.2 per cent this year,” said Stephen Brown, European economist at Capital Economics.

It’s the latest indicator to suggest that the eurozone is losing some of the momentum that saw it grow way faster than the U.S. in the first quarter of the year and that has helped get unemployment across the region down.

The eurozone is not alone in facing headwinds, many of which are external to the region, such as the British vote on June 23 on whether to leave the EU and waning benefits from low oil prices. Within the eurozone, economic confidence could be jolted by any renewed worries over Greece’s future in the single currency bloc, though these appear to be easing, as well as the upcoming Spanish general election.