EMU: Industrial Production

Thu Mar 12 05:00:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 0.2% -0.1% 0.0% 0.3%
Year over Year 0.1% 1.2% -0.2% 0.6%

Eurozone industrial production (ex-construction) was unexpectedly soft in January. However, a 0.1 percent monthly dip, the first drop since last August, followed a stronger revised 0.3 percent gain in December and, combined with other revisions, saw annual workday adjusted growth accelerate from 0.6 percent to 1.2 percent.

January's reversal was dominated by a 2.2 percent monthly decline in durable consumer goods although intermediates (minus 0.5 percent) also underperformed. Elsewhere the news was rather more positive with capital and non-durable consumer goods both rising 0.1 percent and energy up 0.9 percent.

Amongst the larger states, output rose 0.4 percent versus December in France and edged 0.2 percent firmer in Spain. However, German production was only flat and Italy (minus 0.7 percent) had its worst month since September.

Despite its dip, the region's industrial production in January was still 0.2 percent above its average level in the fourth quarter when it increased 0.4 percent. The latest manufacturing PMI (51.0) indicated a only modest advance in output in February but rising orders suggested that there should be better news to come. Overall the signs are that the recovery in Eurozone manufacturing remains less than spectacular but with the benefit of QE and an increasingly weak euro, the second quarter could look a good deal brighter.

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.