Industrial output by producers in the euro area rose no less than 1.1% m/m in February, well above the consensus expectation of 0.4%, and a welcome improvement on January's -0.3% print (revised from -0.1%). Compared to a year ago production was up 1.6% in February, the strongest rate of growth since July of last year.
The cyclical recovery in the euro area is well underway and I expect it to continue for the rest of the year with full-year GDP growth hitting at least 1.5%, up from 0.9% in 2014 and -0.5% in 2013.
The euro area is experiencing a cyclical expansion, helped by a weak euro and low oil prices, but structural issues persist and will continue to weigh on growth until resolved. Therefore, growth may moderate again as the tailwind from the euro area oil fade.