EMU: Industrial Production

Wed Dec 13 04:00:00 CST 2017

Consensus Actual Previous Revised
Month over Month 0.0% 0.2% -0.6% -0.5%
Year over Year 3.5% 3.7% 3.3% 3.4%

Industrial production (ex-construction) proved stronger than expected in October. A 0.2 percent monthly increase followed a marginally smaller revised 0.5 percent drop in September and was enough to lift annual output growth by 0.3 percentage points to 3.7 percent.

The monthly advance was largely attributable to consumer non-durables which saw a 0.5 percent gain, their fourth consecutive increase. Energy edged 0.1 percent firmer but intermediates were only flat and there were fresh declines in both consumer durables (1.9 percent) and capital goods (0.3 percent).

Regionally the headline gain was held in check by Germany where production shrank a surprisingly hefty 1.4 percent after a 1.2 percent decrease in September. These figures are completely at odds with the survey data and could well be revised stronger in due course. Elsewhere, France (1.8 percent) had a very good month and both Italy (0.5 percent) and Spain (0.6 percent) made useful positive contributions.

Today's update puts October Eurozone industrial production 0.3 percent above its average level in the third quarter when it rose some 1.2 percent versus April-June. However, new orders are expanding at a healthy clip and confidence is high. The sector still looks set for a good fourth quarter.

Industrial production measures the physical output of factories, mines and utilities. The measure provided by Eurostat excludes the volatile construction subsector for which data are 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.