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Euro area industrial production declines more than expected in January

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Euro area industrial production declines more than expected in January

Industrial production in the euro area declined more than expected in January as output of energy, durable consumer goods and intermediate goods decreased from the previous month.

The 1.0% decrease was well-below Econoday's consensus forecast of a 0.4% rise and was down from the 0.4% month-over-month increase in December 2017.

Production of energy declined by 6.6%, durable consumer goods production fell by 1.9%, and production of intermediate goods was down 1.0% from the previous month. Production of capital goods and non-durable consumer goods increased.

Industrial production rose by 2.7% in the euro area in January 2018 from January 2017, compared to expectations of a 4.7% increase. Production of capital goods, intermediate goods, durable and non-durable consumer goods rose from a year earlier, while energy production decreased.

The weaker industrial production data was mainly due to a drop in energy production, said Bert Colijn, senior economist at ING Research. All other production categories have increased from a year earlier, indicating production continues to recover at a relatively strong pace, he said.

Industrial output growth could slow in the second half of the year because of a decline in new orders. "A mild slowdown in the manufacturing sector would be in line with our forecast of somewhat moderating GDP growth as the year progresses," Colijn said.