FR: Industrial Production

Fri Feb 09 01:45:00 CST 2018

Consensus Actual Previous Revised
Month over Month 0.1% 0.5% -0.5% -0.3%
Year over Year 4.5% 2.5%

December industrial production rebounded from a smaller revised decline in November. Following a 0.3 percent dip, output (ex-construction) rose a larger than expected 0.5 percent on the month to lift annual production growth from 2.5 percent to 4.5 percent, its second best reading in 2017.

However, manufacturing was not quite as impressive, posting only a 0.3 percent monthly increase that failed to fully reverse a 0.8 percent mid-quarter fall. Refining (0.5 percent), electronics and machines (1.8 percent) and the other manufactured goods category (0.9 percent) all made positive contributions but there were decreases in food and agriculture (1.2 percent) as well as in transport equipment (2.1 percent). Elsewhere, energy and extracted goods climbed 1.8 percent and construction was up 4.1 percent.

The December report makes for a very healthy 2.2 percent quarterly rise in overall industrial production and an even stronger 2.5 percent advance in manufacturing output. Such robust rates are unlikely to be repeated this quarter but with the January INSEE and PMI surveys both bullish, the near-term outlook for French goods producing industries would appear very bright.

Industrial production measures the physical output of the nation's factories, mines and utilities. Manufacturing is seen as the best guide to underlying developments as some sectors can be very volatile and cause misleadingly large short-term swings in total industrial production.

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 won't 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. Like the PPI and the orders data, construction is excluded from the data. This report has a big influence on market behavior. In any given month, one can see whether capital goods or consumer goods are growing more rapidly. Are manufacturers still producing construction supplies and other materials? This detailed report shows which sectors of the economy are growing and which are not.