What's going on?

Industry in Europe appears to be humming along at a much better clip than expected: industrial production � which is output from manufacturing, mining and utilities � jumped 2.1% in January versus December.

What does this mean?

Last week, strong data from Germany led to expectations that the Eurozone-wide data would be good – but it was even better than expected. While a lot of the strength was due to Germany, Ireland�s industrial output surged by a staggering 13% in January (remember, though, Ireland has a much smaller economy than Germany). Major economies such as France and the Netherlands also did reasonably well (although Spain saw falling production).

Why should I care?

The bigger picture: This is good news � but let�s not overreact. For one, this data is for January and there were some signs that things got worse in February. It�s also quite likely that very low energy prices, like oil, helped because people had more money to spend on other things (the production of consumer goods was one of the areas that led to the improvement in manufacturing). That tailwind might be disappearing somewhat as the oil price rebounds. Also, the measure of industrial production itself isn�t always that accurate: one month�s reading doesn�t necessarily signal an enduring trend (as is the nature of statistics, there is often a pretty wide margin of error).

For markets: Stocks have rallied a lot since the big ECB meeting last week � and this sort of news helps. European stocks are up about 4% in the past two days, which indicates investors are getting more optimistic. Stocks should perform well if the economy is doing better than feared and the central bank is taking a bunch of actions to stimulate the economy. Investors will be keenly watching for signs that the economy really is picking up.