Eurozone industrial production falls sharply in August

[Brussels] Industrial output in the eurozone fell by 1.8 per cent in August, official data showed on Tuesday, a steep drop and another sign that recession in the 18-nation currency bloc could return.

The fall in factory output data was a reverse from the previous month, when an unexpected one-percent rise in industrial activity brought hope that a fragile recovery in the eurozone could be taking hold.

"August's eurozone industrial production data and October's German ZEW survey increase the risk that the single currency area may be entering its third recession in six years," said Jennifer McKeown, senior European economist at Capital Economics.

The state of the eurozone economy has become a major source of worry, with the IMF and other economic players urging bolder action from European policymakers to revive stagnant growth.

The eurozone economy posted zero growth in the second quarter and all eyes are on the first estimate for the third quarter expected later this month.

Underscoring their concern, financial markets have been in retreat on worries about the European economy. Since January 1, the Frankfurt Dax index has lost eight percent and London's FTSE 100 nearly six percent.

In August, the nearly two per cent drop from output in the previous month was fuelled by a 4.8 per cent slide in investment goods, which include infrastructure and machinery, and a 0.7 per cent drop in intermediary goods.

Across the 28-nation European Union, industrial output fell by 1.4 per cent in August from the previous month, pushed lower by a sharp 4.3 per cent slide in investment goods.

By country, powerhouse Germany posted an alarming 4.3 per cent drop in industrial output. Hungary was down 5.8 per cent and Croatia 4.1 per cent.

Denmark saw the biggest rise, up by 6.9 per cent and Portugal by 3.1 per cent.

Also on Tuesday, a survey showed that investment sentiment in Germany fell to its lowest level in nearly two years in October amid concerns about the economic fallout from geopolitical crises and lower-than-expected growth. AFP