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German, French & Italian industrial production disappoints in March

epa04393982 Employees work on a motor of a Mercedes Benz S Class at the assembly line of Daimler in Sindelfingen, Germany, 10 September 2014. According to news reports, car producer Daimler will reorganize its car production and plans to invest more than 3 billion euros in German production facilities.  EPA/SEBASTIAN KAHNERT


Industrial production in the euro area’s three biggest economies disappointed in March, possibly signaling slackening demand in Europe.
German production, adjusted for seasonal swings, fell 1.3 percent, its second consecutive decline and exceeding a 0.2 percent drop predicted by economist in a Bloomberg survey. In France, output unexpectedly fell 0.3 percent, and Italy saw production stagnate in March after a drop in February. Output dropped 2.4 percent in the Netherlands.
The reports suggest growth in the euro area may have started to lose some momentum toward the end of the quarter, when the economy expanded at its fastest pace in a year. An initial estimate put expansion in the January-March period at 0.6 percent, and a second reading will be published on Friday. “It’s a small disappointment only,” said FrederikDucrozet, economist at BanquePictet&Cie SA in Geneva. While it’s a setback from strong growth at the start of the year, that “slowdown is discounted already and not big enough to challenge the view that underlying momentum remains healthy.”
In France, manufacturing fell 0.9 percent, compared to a forecast for a 0.6 percent increase. Separately, a Bank of France business sentiment index was unchanged in April. Barclays said industry is set to drag on growth in the euro region’s second-largest economy and it may have expanded less than initially estimated in the first quarter.
Germany’s output was dragged lower by a 3.2 percent drop in construction and 1.2 percent decline in manufacturing. Output of investment goods fell 1.4 percent.

Slowing Growth
Slowing global growth has led the German economy to rely increasingly on domestic demand, bolstered by record-low unemployment. Yet business confidence deteriorated last month and the Bundesbank said that it expects slowing momentum in the second quarter amid global headwinds.
Still, factory orders on Monday signaled that industrial output should pick up in coming months. Orders jumped 1.9 percent in March, more than economists had forecast.

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