FRANKFURT, March 13 (Reuters) - Euro zone industrial production unexpectedly fell in January, data from Eurostat showed on Friday, casting doubt on the sector's long-predicted recovery, especially as the recent surge in energy costs will also weigh on demand.
Output in the 21 nations sharing the euro currency dropped by 1.5% on the month, underperforming expectations for 0.6% growth, while compared to a year earlier, output was down 1.2% against expectations for 1.4% growth in a Reuters poll of economists.
Industry has been broadly stagnant for years and its output is still below its 2021 level as high energy costs, stiffening competition from China, U.S. tariffs, poor productivity growth and low global demand for European cars have all hurt the bloc.
Output in Germany, the euro zone's biggest country and the bloc's dominant car maker, is 9% below its 2021 level and has been trending down for years, keeping the overall German economy stagnant for the past three years.
Euro zone industry was expected to recover this year, partly on the German government spending spree on defence and infrastructure, but the recent jump in energy costs has cast a shadow over this rebound.
Oil prices are up around two thirds since the start of the year and natural gas costs are up around 80% on the U.S.-led war in Iran, a double whammy for industry as it raises costs and saps purchasing power.
Europe is a net importer of energy and its industry is especially sensitive to commodity price shocks as the bloc has relatively few natural resources.
(Reporting by Balazs Koranyi; Editing by Toby Chopra)
