After months of disappointing data, industrial production in the eurozone came in better than expected in January, following a strong contribution from the energy sector.

The EU’s statistics office Eurostat reported that production in the currency bloc rose by 1.4 per cent in January from December, when it fell by 0.9 per cent. Compared to the same month last year, however, production fell by 1.1 per cent. Economists had forecast a one per cent month-on-month increase and a 2.1 per cent annual decline.

Growth was underpinned by a 2.4 per cent rise in energy production.

Germany took the shine off the positive numbers reported elsewhere, with industrial production in the powerhouse of the entire bloc falling by 0.9 per cent on the month, a bigger decline than the estimated 0.8 per cent fall.

In the meantime, UK GDP growth beat economists’ expectations, hitting 0.5 per cent in January. That was the biggest increase in monthly output since December 2016, according to the Office for National Statistics. This more than recouped the dismal end to 2018, which saw GDP growth at -0.4 per cent in December and growth of a mere 0.2 per cent in November.

Therefore, despite the January recovery, the rolling three-month growth remained underwhelming at 0.2 per cent. A global economic slowdown, as well as uncertainty over the UK’s departure from the EU, have combined to hamper activity in both manufacturing and construction. Finally in the US, a report released by the Labour Department showed a modest increase in US consumer prices in February.

According to the report, the consumer price index rose by 0.2 per cent in the review month, after coming in unchanged for three consecutive months. The uptick in prices matched estimates and was partly due to a rebound in gasoline prices. On a year-on-year basis, consumer prices gained 1.5 per cent, the smallest rise since 2016. Excluding food and energy, the key core consumer price index rose by 0.1 per cent in February from the prior month and by 2.1 per cent from a year earlier.

These figures trailed economists’ estimates and appear to endorse the recent neutral stance adopted by the Federal Reserve with respect to future interest rate increases.

This report was compiled by Bank of Valletta for general information purposes only.


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