Industrial output in the euro zone fell by 1.8% in August, official data showed today, 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 1% rise in industrial activity brought hope that a fragile recovery in the euro zone could be taking hold.
Analysts said that August's euro zone 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.
The state of the euro zone 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 euro zone 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 8% and London's FTSE 100 nearly 6%.
In August, the nearly 2% drop from output in the previous month was fuelled by a 4.8% slide in investment goods, which include infrastructure and machinery, and a 0.7% drop in intermediary goods.
Across the 28-nation European Union, industrial output fell by 1.4% in August from the previous month, pushed lower by a sharp 4.3% slide in investment goods.
By country, powerhouse Germany posted an alarming 4.3% drop in industrial output. Hungary was down 5.8% and Croatia 4.1%. Denmark saw the biggest rise, up by 6.9% and Portugal by 3.1%.
Meanwhile, a survey today 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.
