EMU: Industrial Production

Wed Feb 14 04:00:00 CST 2018

Consensus Actual Previous Revised
Month over Month 0.4% 0.4% 1.0% 1.3%
Year over Year 5.2% 3.2% 3.7%

Goods production (ex-construction) rose 0.4 percent on the month in December, its third increase in a row and in line with market expectations. Following an upwardly revised 1.3 percent gain in November, this put annual growth at 5.2 percent, up from 3.7 percent and the strongest outturn in more than six years.

December's monthly advance would have been sharper but for a 1.1 percent contraction in capital goods output. However, this was preceded by a 3.5 percent surge in November. Intermediates increased 1.4 percent, durable consumer goods 2.7 percent and consumer non-durable 0.7 percent. Energy was also up 1.3 percent.

Regionally, most member states registered monthly gains although Germany (minus 0.5 percent) weighed on the headline reading. Slovenia (2.7 percent), Estonia (2.5 percent) and Italy (1.6 percent) enjoyed a particularly good month.

Today's report puts fourth quarter Eurozone industrial production 0.7 percent above its third quarter level and so ensured a healthy contribution from the sector to the period's real GDP growth. Business surveys currently suggest something similar for the quarter just begun.

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.