EU industrial production rate fell.

Eurozone industrial production fell more than expected in October, adding to signs the bloc is heading for a recession this winter and making it more likely the European Central Bank will opt for a smaller rise in interest rates this week. The 2 per cent month-on-month drop in factory output across the bloc ended a period in which manufacturing growth had remained relatively resilient, despite soaring energy prices caused by Russia’s invasion of Ukraine. October’s decline was deeper than the 1.5 per cent drop expected by economists polled by Reuters, as more businesses scaled back production as a result of continued high gas and electricity prices and weaker demand. Most economists expect the ECB to raise its deposit rate by 0.5 percentage points to 2 per cent after two consecutive 0.75-point rises.

Higher gas and electricity prices have forced many of Europe’s energy-intensive companies, such as makers of chemicals, metals, fertiliser and glass, to cut or even close production in Europe and shift some operations to lower-cost regions. Output in energy-intensive sectors fell 2.6 per cent in October, the sixth consecutive monthly drop, taking the decline since the start of the year to almost 10 per cent. «The short-term outlook for industrial production looks bleak,» said Adrian Prettejohn, an economist at Capital Economics. «Manufacturers have previously been able to maintain production by reducing backlogs, but the drying up of new orders will hit production in the coming months».

By sector, the biggest monthly drop was a 3.9 per cent decline in energy production after strikes at French refineries, according to Eurostat, the EU statistics agency. Compared with a year earlier, overall industrial output was still up 3.4 per cent.

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