EMU: Industrial Production

Thu Jan 11 04:00:00 CST 2018

Consensus Actual Previous Revised
Month over Month 0.6% 1.0% 0.2% 0.4%
Year over Year 3.2% 3.2% 3.7% 3.9%

November was an excellent month for Eurozone goods production. Excluding construction, output rose a very robust 1.0 percent versus October, itself revised up to show a 0.4 percent gain. The latest increase was comfortably stronger than the market consensus and a dip in annual workday adjusted growth from 3.9 percent to 3.2 percent simply reflected negative base effects. Production has now shown positive monthly growth in four of the last five months.

Moreover, November's monthly surge was reassuringly broad-based. Hence, amongst the major subsectors, capital goods output was up some 3.0 percent while durable consumer goods rose 1.6 percent and intermediates 1.1 percent. Non-durables also edged 0.1 percent firmer while the volatile energy category was flat.

Regionally amongst the larger member states, output expanded fully 3.6 percent on the month in Germany and was 1.0 percent higher in Spain. In addition, all the signs are that Italy (data due tomorrow) was not far behind. France lagged with a 0.5 percent drop but this followed a 1.6 percent bounce last time.

Eurozone industrial output grew at a quarterly 1.2 percent rate in the July-September period and, even without any further increase in December, today's data suggest that the fourth quarter will match that rate. The sector is now enjoying near-boom conditions which should, in time, finally start to put upward pressure on wages.

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.