EMU: Industrial Production

Mon Dec 14 04:00:00 CST 2015

Consensus Actual Previous Revised
Month over Month 0.2% 0.6% -0.3%
Year over Year 1.5% 1.9% 1.7% 1.3%

The Eurozone goods producing sector (ex-construction) kicked off the fourth quarter with a stronger than expected 0.6 percent monthly rise in output, its first increase since July. October's gain followed an unrevised 0.3 drop in September and lifted annual workday adjusted production growth from 1.3 percent to 1.9 percent.

October's respectable monthly advance came largely courtesy of the capital and durable consumer goods subsectors where output climbed 1.4 percent and 1.8 percent respectively. Non-durable consumer goods were also up 0.4 percent and energy advanced 0.6 percent but intermediates dipped 0.1 percent.

Regionally there were monthly increases in all of the larger four member states with France and Italy (both 0.5 percent) leading the way ahead of Spain (0.3 percent) and Germany (0.1 percent). The steepest rises were seen in Lithuania (11.3 percent) and the Netherlands (4.3 percent) while the sharpest declines were posted by Greece (1.2 percent) and Finland (0.9 percent). Ominously, the contraction in Greece followed a hefty 1.8 percent slump in September.

The latest data put October Eurozone industrial production 0.3 percent above its average level in the third quarter when it rose a meagre 0.2 percent versus April-June. The November PMI also pointed to a slight improvement in activity rates in mid-quarter so unless December disappoints (note, flash PMI figures are due Wednesday) goods production should contribute positively to real GDP growth this quarter. Even so, overall economic activity in the region still looks unlikely to expand by more than 0.4 percent, just a tick faster than in July-September.

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.