Eurozone industrial production beats expectations

Eurozone industrial production rose faster than expected in January led by France and Italy, suggesting manufacturing will have another solid quarter.

Factory output increased 0.8% from a month earlier, beating a consensus forecast for a 0.5% gain. Production increased 0.7% in the EU, Eurostat said.

Gains in major economies France and Italy were the main drivers behind the increase with output rising 3.4% in France and 1% Italy. Those increases helped offset small declines in Spain and Germany, the eurozone's biggest manufacturer. Production also rose 3.4% in Greece and 3.1% in Belgium.

Manufacturing in the eurozone has held up well during recent lockdowns with most factories operating as normal and expectations running high for an economic recovery in 2021. Busy factories have helped make up for a torrid time for retail and services businesses that has hit the wider economy.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "This a decent headline. The recovery in manufacturing will continue, but at a slower pace.

"We expect an increase of 2.5% quarter-on-quarter, consistent with output rising by just under 2% through February and March. That’s solid, but like in Q4, it won’t be enough to prevent a fall in GDP due to weakness in services and consumers’ spending."