BRUSSELS (Reuters) - Output at euro zone factories fell slightly in January, but Thursday's data also showed evidence to support hopes that the bloc's fragile economy may be recovering.
Industrial production in the 19 countries sharing the euro fell 0.1 percent from December, the EU's statistics office Eurostat said, compared to the 0.2 percent rise forecast by economists polled by Reuters.
Still, on an annual basis, industrial production posted its best reading since July 2014, increasing 1.2 percent and outstripping economists' expectations of a 0.1 percent rise.
That strong performance was helped by increases in France, Germany, Spain and Ireland as production of goods including televisions and computers rose 2.5 percent. Italy, which along with France and Germany makes up two-thirds of industrial output, fell 2.2 percent however.
Overall, the data appears to back an emerging trend of improving morale among households who have suffered through the global financial crisis and the bloc's ensuing debt crisis.
The euro zone crisis drove a vicious cycle of falling business consumer morale, repossessed homes and lengthening job queues that has sucked away demand for factory-made goods.
Now, a host of euro zone data, from retail sales to falling unemployment numbers, suggest that a weaker euro, cheaper oil, low interest rates and the European Central Bank's money-printing program are helping the bloc avoid the stagnation many feared.
Industrial production was also revised up in December from November into positive territory, Eurostat said, meaning that on average, output has been growing since a decline in August.
Production of machinery used to make other goods, an indicator of future business, rose slightly in January from December. On an annual basis, capital goods production rose 1.4 percent in the first month of this year.
If production of those capital goods continues to increase, that should support business surveys and the view of the European Commission and the ECB that the euro zone will post modest growth in 2015 and an acceleration in 2016.
Reporting by Robin Emmott; editing by Philip Blenkinsop