Euro zone industry output wipes out Jan gains in February

BRUSSELS (Reuters) - Euro zone industrial output declined as expected in February after expansion in January, dampening prospects for economic growth in the first quarter after a solid end to 2020 for manufacturers.

Eurostat said industrial production in the 19 countries sharing the euro fell 1.0% month-on-month in February for a 1.6% year-on-year drop, compared with market expectations of a 1.1% monthly decline and -0.9% annual reading.

That compared with increases of 0.8% month-on-month and 0.1% year-on-year in January.

The weak output in monthly terms in February was across all categories with the steepest decline of 1.9% for capital goods, 1.2% for energy and 1.1% for durable consumer goods.

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Capital goods had registered the sharpest increase in January.

Production in February fell by most in France, Malta and Greece. It was also down in the euro zone's largest economy, Germany.

The euro zone economy contracted by 0.7% in the last quarter of 2020 against the previous quarter, as household consumption plunged because of COVID-19 lockdowns while gross fixed capital formation rose.

An initial estimate for first-quarter GDP is due on April 19.

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(Reporting by Philip Blenkinsop)