Osprey Associates: Industrial production in the beleaguered Eurozone surged unexpectedly in January, driven by a sudden jump in output from Ireland. Production increased by 2.1% across the 19 countries using the single currency broke a 2-month run of readings showing contraction.

On an annualized basis, industrial output rose by 2.8% compared with the same month in 2015 and represented the highest percentage increase since August 2011.

Analysts’ had forecast a 1.7% increase but Irelands outstanding 12.7% helped push the overall Eurozone number higher. The country, once dubbed the “Celtic Tiger” on account of robust growth of its economy, had its banking system effectively bailed out by the IMF, ECB and European Commission in 2010.

Despite the imposition of tough austerity measures, the country emerged from its bailout three years later with no conditions and has grown modestly, but consistently since. The Eurozone has battled slow growth weighed down by an over-indebted banking system and the effects of austerity measures that have limited the ability of governments to expand budgets to drive economic growth.

“January’s numbers look encouraging but the truth is that it’s unlikely growth can be sustained at this level,” said James Conroy, chief economist at Osprey Associates.

“Even industrial powerhouse, Germany, is only growing at a modest pace and the effects of the European Central Bank’s huge quantitative easing program doesn’t appear t have fed through into the economic data yet,” said Conroy.

Osprey Associates says it does not expect a strong pick up in Eurozone growth despite the ECB’s recent foray into negative interest rates and an expansion of its QU program.

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