German, French and Spanish industrial output beat forecasts in August

Much stronger-than expected monthly readings on industrial production from several of the euro area´s largest economies assuaged some - but not all - of the doubts economists were harbouring about the vigour of the bloc´s economic expansion in the very near-term.

Industrial production in Germany sped ahead by 2.5% month-on-month in August (consensus: 1.0%), alongside increases of 2.1% in France (consensus: 0.7%) and 1.4% in Spain.

In both Germany and Spain, a "significant" divergence had opened between the official data on output and orders, Dominic Bryant at BNP Paribas said in a research note sent to clients.

Hence, Bryant expected some 'pay back' come September.

German industrial production data were "especially strong", revealing a greater than 3% jump if the construction sector was excluded, and was in-line with the most recent readings PMI and IFO survey readings, Bryant said,.

Activity in France was also stronger than BNP had anticipated, notwithstanding that a bounce-back was in order given the depressing effect of industrial production in July.

All of the above pointed to upside risks to their forecast for euro area growth to slow from the 0.3% quarter-on-quarter clip observed in the second quarter to 0.2% in the third, the broker said.

Nonetheless, service sector PMIs and retail sales figures had weakened, the economist cautioned.

Stephen Brown, european economist at Capital Economics, was of a similar view, telling clients: "Today´s data point to a stronger contribution from industry to Eurozone GDP growth in the third quarter than in the second. But given the weaker message painted by service sector surveys, Q3 GDP growth probably still won´t beat the 0.3% recorded in the second quarter."