Euro zone industrial production was much higher than expected in November, data showed today, thanks to a rebound in the output of intermediate and capital goods that bode well for investment later in 2021. 

The European Union's statistics office, Eurostat, said industrial output in the euro zone rose 2.5% in November from October for a 0.6% year-on-year decline. 

Economists polled by Reuters had expected a modest 0.2% monthly rise and a 3.3% annual fall, as the euro zone economy grapples with the second wave of the Covid-10 pandemic. 

"Industry continues to recover from the first wave, despite all of the second-wave problems that the economy is currently facing.

"At the moment, production is less than 1% below pre-coronavirus levels, which is a remarkable feat in and of itself," said Bert Colijn, euro zone economist at ING bank. 

"For now industry has turned out to be the euro zone's dark horse, cushioning the fourth-quarter blow from the second wave (of the Covid-19 pandemic) substantially," Colijn said.

Ireland was the clear outlier, with a 52.8% surge in industrial output in the month, which Central Statistics Office said was caused by revisions of seasonal adjustment models because of the Covid pandemic. 

Production also rose in Germany, but was down in France, Italy, Spain and the Netherlands. 

The better than expected result was mainly due to a 7% monthly increase in output of capital goods and a 1.5% monthly rise in intermediate goods, which helped offset falls in the production of energy and durable and non-durable consumer goods. 

Also year-on-year, capital goods production rose 0.1% in November after an 8% year-on-year slump in October. Intermediate goods output was up 1.1% after a 0.9% fall in October. 

Intermediate and capital goods often give early indications of investment trends. 

"Especially encouraging was the strong surge in capital goods production. While investment has been very weak over the course of 2020, this is an encouraging sign for the end-of-year performance," Colijn said.