Euro zone industry output slips in September on weakness in Italy

By Philip Blenkinsop

BRUSSELS (Reuters) - Euro zone industrial production unexpectedly declined in September, driven chiefly by a sharp fall in the output of durable consumer goods and weakness in Italy, sounding a negative note to a quarter that had begun strongly.

The European Union's statistics office Eurostat said on Thursday that industrial production in the 19 countries sharing the euro fell 0.4% month-on-month in September for a 6.8% year-on-year decline.

That compared with the average expectations in a Reuters poll of economists of respectively a 0.7% increase and a drop of 5.8%.

It also marked the fourth consecutive month of declining production growth from 12.5% in May to 5.3% in July, 0.6% in August and now a slip in September.

ING economist Bert Colijn said the September decline was not because of any impact of a second wave of COVID-19 infections, but rather distorted by poor figures from Italy.

Production in Italy, the euro zone's third largest economy, fell by 5.6% in September, the steepest drop in the bloc zone, followed by Ireland and Portugal.

Many countries, including the largest economies Germany and France and the fourth largest, Spain, recorded increases.

"The overall trend remains one of cautious recovery ahead of the fourth quarter, where manufacturing is unlikely to be immune to service sector lockdowns," Colijn said.

Output of durable consumer goods, such as televisions and washing machines, has been the strongest component of the previous months' growth, but fell back 5.3% in September. Energy production was also down, by 1.0% in the month.

All other components rose, notably of non-durable consumer goods, such as clothes, by 2.1%.

Year-on-year, the only euro zone country with higher production was Portugal. The sharpest fall, of 13.6%, was in Ireland, followed by Germany, the Netherlands and France, with declines of greater than 6%.

(Reporting by Philip Blenkinsop, Editing by Robin Emmott and Alison Williams)