Industrial output in France and Italy far outstripped expectations in December, closing 2006 in buoyant fashion and offsetting a surprise fall in Germany, data showed today.
Output in France, the euro zone's second largest economy, jumped 1.1 per cent while Italy, the third largest, posted a 2.0 per cent monthly surge - the strongest rise since April 2005.
Economists said the data were unlikely to shift thinking at the European Central Bank, which left interest rates at 3.5 per cent yesterday but strongly signalled a quarter-point increase in March.
Analysts had forecast output to increase 0.4 per cent in Italy and 0.3 per cent in France. In Italy, the fourth quarter output rise of 1.6 per cent was the strongest quarterly gain since the third quarter of 1999.
The monthly jump in France was tempered by the a decline in output of 0.1 per cent in the fourth quarter from the previous three months, weighed down by a struggling automobile sector.
German industrial production undershot all forecasts in December, posting a drop of 0.5 per cent, official figures showed earlier this week.
But following a three percentage point increase in sales tax at the start of the year, economists had feared a far sharper slowdown in the euro zone's biggest economy than has so far been the case at the start of 2007.
Still, output growth did slow palpably at the end of 2006, up just 0.1 per cent in the final quarter after an increase of 2.1 per cent in the third.
"The German economy has shown the first signs of losing momentum, with net trade slackening in December, while industrial production has been slowing on a yearly basis since September due to weakness in the consumer goods sector," economists at HSBC in Paris, said in a note.