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European Industry Delivers Surprise Gain at End of Third Quarter

European Industry Delivers Surprise Gain at End of Third Quarter

(Bloomberg) --

Euro-area industrial production unexpectedly rose for a second month in September, offering a sign the economy was beginning to emerge from a slump at the end of the third quarter.

Output was up 0.1%, after a 0.4% gain in August, Eurostat said Wednesday. The big drivers for the increase -- which was far better than the 0.2% decline forecast by economists -- were capital goods and non-durable consumer goods.

European Industry Delivers Surprise Gain at End of Third Quarter

While the figures are backward looking, they may help to continue a recent shift in the view about the European and German economies. Surveys appear to have stabilized, and while a dramatic pickup in momentum is unlikely, the situation at least isn’t getting worse. Figures due Thursday likely to show Germany in a technical recession in the third quarter may mark the low point for the region.

Key to the outlook is the trade battle between the U.S. and China, and the timing and scale of any phase-one deal between them. President Donald Trump said Tuesday the U.S. will increase tariffs in case the first step of a broader agreement isn’t reached. That was enough to push stocks in Europe and Asia lower after a recent rally on trade hopes.

On a year-on-year basis, industrial production continued to decline in September, though the 1.7% drop was the smallest in four months. On the monthly measure, Germany, Italy and Spain saw drops in output, while France increased.

--With assistance from Kristian Siedenburg and Harumi Ichikura.

To contact the reporter on this story: Fergal O'Brien in Zurich at fobrien@bloomberg.net

To contact the editors responsible for this story: Craig Stirling at cstirling1@bloomberg.net, Jana Randow

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