EMU: Industrial Production

Wed Jan 14 04:00:00 CST 2015

Consensus Actual Previous Revised
Month over Month 0.1% 0.2% 0.1% 0.3%
Year over Year -0.7% -0.4% 0.7% 0.8%

Industrial production (ex-construction) eked out a third consecutive monthly rise in November. A marginally firmer than expected 0.2 percent increase followed an upwardly revised 0.3 percent gain in October but, courtesy of a surge in output in the year ago period, still saw annual workday adjusted growth slide from 0.8 percent to minus 0.4 percent.

The mid-quarter's monthly advance was largely attributable to a 1.9 percent bounce in durable consumer goods, supported by a 0.5 percent increase in non-durables and a 0.3 percent rise in intermediates. Capital goods posted a 0.2 percent drop and energy was down 0.9 percent.

Regionally, production in the larger EMU states disappointed with monthly falls in both France (0.3 percent) and Spain (0.1 percent) and no change in Germany. Italy recorded a 0.3 percent rise, its first increase since August.

November's modest monthly increase in overall Eurozone industrial output was the smallest since production started expanding again in September. Indeed, production was still 0.2 percent short of its level in July. Still, average output in October/November was at least 0.3 percent above its third quarter mean and the likelihood is that the sector provided a small positive contribution to fourth quarter real GDP growth.

This indicator measures the physical output of factories, mines and utilities for the 17 EMU members. The measure preferred by the ECB excludes construction which is released a few days later.

Industrial production measures changes in the volume of output for the EMU's member states. The industrial production index provides a measure of the volume trend in value added at factor cost over a given reference period, excluding VAT and other similar deductible taxes. The preferred number is industrial production excluding construction. As with other EMU statistics, the data are provided by the national statistics offices to Eurostat (the European Union statistical agency) where it is combined to produce an overall output measure.

Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that will not lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios.