It is time for the ECB to start thinking outside the box to revive growth prospects in the fast-flagging Eurozone economy. Eurozone policy makers should not be lulled by February’s 0.4% monthly rise in industrial output. Annual growth remains in deep negative territory pulled down by severe recession forces sweeping through the Eurozone. Business sentiment is very downbeat, output intentions remain under water, while there are no glimmers of recovery on the near or far horizon. ECB hopes that the Eurozone economy will pick up later this year are simply wishful thinking while a large part of the Eurozone economy is suffering such serious austerity and economic sentiment remains so vulnerable.
Much of the 0.4% bounce in February can be explained by very cold weather effects, boosting energy output by 2.6% in the month. This is not expected to last as the weather improves. Weak domestic demand, faltering business sentiment and the uncertain global outlook will continue to dampen output intentions ahead. The ECB will need to cut rates again and will need to consider additional ‘non-standard measures’ like their G7 counterparts to help resurrect much better recovery down the road. With Draghi promising to ‘monitor very closely’ the overall picture, it means a rate cut should be due soon, but it will be to little avail considering the depth of the downturn in the beleaguered peripheral Eurozone economies. The ECB needs to stand and deliver a much larger quotient of monetary stimulus through quantitative easing as the US Federal Reserve, the Bank of Japan and the Bank of England have mustered before them. It is time to come off the fence.
Euro zone industrial production increased by 0.4 percent in February from the previous month, data from the European Union statistics agency Eurostat showed on Friday.
Industrial production - monthly variation pct change compared with previous month (seasonally adjusted)
Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13
Euro Zone
Total industry -2.1 -0.7 -0.6 0.7 -0.6 0.4
Intermediate goods -1.9 -0.7 -0.9 0.2 0.0 -0.1
Energy -1.4 -1.1 -0.4 -1.5 0.1 2.6
Capital goods -2.5 -2.0 0.2 1.0 -1.7 0.9
Durable consumer goods -3.4 -1.7 -1.3 1.8 -1.7 1.3
Non-durable consumer goods -2.4 1.0 -1.4 1.9 0.3 -1.5
EU27
Total industry -2.0 -0.6 -0.6 0.6 -0.5 0.4
Intermediate goods -1.8 -0.6 -0.9 0.3 -0.1 0.2
Energy -2.4 -0.9 -0.1 -0.8 -0.3 1.8
Capital goods -2.3 -1.6 0.2 0.9 -1.5 0.6
Durable consumer goods -2.9 -0.6 -1.7 1.0 -0.8 0.0
Non-durable consumer goods -1.9 0.6 -1.3 1.4 0.8 -1.3
Industrial production - annual variation
pct change compared with same month of the previous year (working day adjusted)
Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13
Euro Zone
Total industry -2.7 -3.1 -4.0 -2.0 -2.4 -3.1
Intermediate goods -4.3 -4.2 -5.6 -4.7 -4.0 -3.0
Energy -0.7 -0.3 -0.3 -0.3 -0.9 -6.1
Capital goods -1.5 -3.5 -4.4 -1.5 -3.7 -3.5
Durable consumer goods -4.1 -5.2 -6.5 -2.7 -7.3 -4.8
Non-durable consumer goods -2.7 -1.9 -2.5 -0.5 1.8 0.1
EU27
Total industry -2.6 -2.8 -3.6 -2.0 -2.4 -2.5
Intermediate goods -3.8 -3.7 -5.0 -4.4 -4.1 -2.5
Energy -2.0 -1.5 -1.1 -0.6 -1.2 -5.9
Capital goods -1.5 -3.0 -3.8 -1.3 -3.1 -2.8
Durable consumer goods -3.5 -3.4 -5.6 -3.0 -5.5 -4.5
Non-durable consumer goods -2.0 -1.6 -2.2 -1.1 1.1 0.7
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