Euro zone industrial output inches up but remains weak

FRANKFURT (Reuters) -Euro zone industrial production inched higher in July, confirming views that the sector is holding up despite trade tensions, even if its rate of expansion is anaemic, data from Eurostat showed on Tuesday.

Industrial output in the 20 nations sharing the euro rose by 0.3% on the month, just trailing expectations for 0.4% in a Reuters poll of economists, as a big drop in energy output was offset elsewhere.

Compared to a year earlier, output was up 1.8%, ahead of expectations for 1.7%, partly on a significant upward revision of June's figures.

"Survey evidence, including the HCOB manufacturing PMI, provides hope that manufacturing activity will pick up some positive momentum in late 2025," Diego Iscaro at S&P Global Market Intelligence said:

"More supportive fiscal policy in Germany and higher defence spending across the area will provide a boost, but this impact will be more noticeable from 2026," Iscaro added.

The monthly increase was driven by a 1.5% expansion in Germany, the bloc's biggest economy and key industrial powerhouse, but France and Spain both reported monthly declines.

Capital, durable and non-durable goods production all expanded by more than 1% on the month across the euro zone but energy production, a volatile component, was down 2.9%.

(Reporting by Balazs Koranyi; Editing by Kirsten Donovan)