Industrial production rebounds

Euro-area industrial production unexpectedly rebounded in May as growth in Germany, Europe's largest economy, more than offset a decline in France.

Output in the 17-nation euro area rose 0.6 per cent from April, when it fell 1.1 per cent, the European Union's statistics office in Luxembourg said today.

From a year earlier, production fell 2.8 per cent after decreasing 2.4 per cent in April.

Europe's economy is slipping toward its second recession in three years as budget cuts across the region erode export and consumer demand. PSA Peugeot Citroen, Europe's second-largest carmaker, said today it will eliminate 14,000 jobs to stem widening losses.

The European Central Bank last week cut borrowing costs to a record low after Spain and Cyprus joined Greece, Ireland and Portugal in asking for external aid.

"The bounce in euro-zone industrial production in May does little to change the view of a contraction in the overall economy in the second quarter," said Martin Van Vliet, an economist at ING Bank in Amsterdam.

"With the fiscal squeeze in the euro zone unlikely to ease soon and the debt crisis still unresolved, any recovery in euro-zone industrial activity later this year will likely be modest."

German industrial output rose 1.5 per cent in May from the previous month, when it slipped 2 per cent, today's report showed. Italy and Spain reported monthly gains of 0.8 per cent and 0.9 per cent, respectively. France had a 2.1 per cent decline.

Bloomberg