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Eurozone industrial output falls 1.4 pct in October, a sign recession is worsening


Portuguese carpenter Arturo Ventura closes the door of the carpenter's workshop where he works in Lisbon, Tuesday, Dec. 11, 2012. Ventura's employer Felipe Valentim, whose carpenter's workshop supplies wood materials to construction companies and had around fifty employees, is now trying to sell his company due to a drop in orders over the past two years. The Portuguese Federation of Construction Companies says bankruptcies of building companies increased 43.7 percent between January and October amid the bailed-out country's economic recession, with more than 85.000 jobs lost so far this year. The board on the left reads in Portuguese: "For let". (AP Photo/Francisco Seco)

LONDON - Industrial production across the 17 European Union countries that use the euro unexpectedly slumped in October, official figures showed Wednesday, in another sign that the region's recession is getting worse and weighing on big economies like Germany.

Eurostat, the EU's statistics office, said industrial production fell by a monthly 1.4 per cent, in contrast to expectations of a modest 0.2 per cent increase.

Germany, Europe's biggest economy, fared particularly badly, with its industrial sector posting a 2.4 per cent monthly decline in output. Germany has actually seen its industrial sector, made of heavyweights such as car companies Daimler AG and Volkswagen AG, shrink for three straight quarters.

"If any further evidence were needed that the economic weakness is no longer confined to the periphery, German industrial production has dropped by 3.8 per cent in the last year, a bigger fall than that seen in both Spain and Greece," said Jonathan Loynes, chief European economist at Capital Economics.

The eurozone fell back into a mild recession in the third quarter officially defined as two straight quarters of negative growth after its economy contracted by a quarterly rate of 0.1 per cent.

Coming in the wake of a bigger-than-expected 1.2 per cent drop in retail sales in October, Wednesday's figures have reinforced expectations that the eurozone recession has deepened heading into the final quarter of the year. Industrial output is a core part of the eurozone economy, not least in Germany which has prospered over the past few years through the export of its high-value products, such as cars and machinery.

James Ashley, senior European economist at RBC Capital Markets, said the figures are "certainly consistent with the general message from the 'soft' survey readings which suggest that the risks to our euro area Q4 GDP forecast of -0.2 per cent are skewed to the downside."


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