EMU: Industrial Production

Wed May 13 04:00:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 0.3% -0.3% 1.1% 1.0%
Year over Year 0.8% 1.8% 1.6% 1.9%

Goods production was disappointingly weak in March. Moreover, a surprise 0.3 percent monthly fall in output (ex-construction) followed a slightly softer revised 1.0 percent rise in February, although at least production at the start of the year was adjusted a little firmer. Compared with a year ago growth dipped from 1.9 percent to 1.8 percent.

March's monthly decline was disappointingly broad-based. Hence, in addition to a 1.7 percent slump in energy output, capital and durable consumer goods were down 0.9 percent and intermediates were off 0.3 percent. Only consumer non-durables (2.3 percent) enjoyed a strong period.

Regionally much of the damage was caused by Germany where production contracted 0.7 percent on the month. Amongst the other larger countries France saw a 0.2 percent decline but Italy (0.4 percent) and Spain (1.0 percent) registered decent gains.

Fortunately the buoyancy of February was still enough to ensure a first quarter rise in Eurozone industrial production of 0.9 percent versus the fourth quarter, almost double the previous period's 0.5 percent rate. However, April's PMI pointed to no further acceleration last month and prospects for the second quarter as a whole remain rather clouded, not least due to the recent appreciation of the euro.

This indicator measures the physical output of factories, mines and utilities for the 19 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.