EMU: Industrial Production

Thu Feb 12 04:00:00 CST 2015

Consensus Actual Previous Revised
Month over Month 0.1% 0.0% 0.2% 0.1%
Year over Year 0.4% -0.2% -0.4% -0.8%

Industrial production (ex-construction) was a little weaker than expected in December. An unchanged level of output versus November when it increased a downwardly revised 0.1 percent was enough to see annual workday adjusted growth rise from minus 0.8 percent to minus 0.2 percent but this simply reflected positive base effects.

However, the disappointing year-end performance masked solid monthly gains in both intermediates (1.1 percent) and durable consumer goods (2.3 percent) and reflected instead a sizeable decline in consumer non-durables (1.8 percent). Capital goods saw a modest 0.2 percent rise and energy was up 1.0 percent.

Regionally it was the usual mixed bag and while production advanced from mid-quarter in France (1.6 percent), Germany (0.5 percent) and Italy (0.4 percent) it fell in Spain (0.2 percent) and was sharply lower in Portugal (3.6 percent), Malta (3.3 percent) and Greece (1.4 percent).

The latest figures put Eurozone industrial output 0.2 percent above its level in the third quarter when it contracted 0.4 percent. Accordingly the signs are that goods production provided a minor boost to real GDP growth in October-December but any upside surprise in tomorrow's flash estimate will be due to an unexpectedly strong performance by services.

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.