Industrial production staged a partial recover in January. Following a steeper revised 1.3 percent monthly fall in December, output rose 0.7 percent, a couple of ticks stronger than the market consensus and enough to lift annual growth from minus 2.0 percent to 0.9 percent. Production was 3.8 percent above its pre-pandemic level in February 2020.

However, January's monthly advance was very uneven, being wholly attributable to a 1.5 percent jump in intermediates. Even then, the subsector's output was still 5.3 percent lower on the year. Elsewhere, capital goods fell 0.2 percent versus December, consumer durables 0.7 percent, non-durables 2.1 percent and energy 0.8 percent.

Regionally, the picture was equally mixed with a solid, and much-needed, monthly gain in Germany (1.8 percent) contrasting with declines in France (1.9 percent), Italy (0.7 percent) and Spain (0.9 percent).

Today's update puts Eurozone industrial production 0.3 percent above its average level in the fourth quarter and may pave the way for a positive contribution from the sector to GDP growth this quarter. That said, with the manufacturing PMI (48.5) still below 50 in February, any quarterly rise is likely to be only small. As it is, the January data leave both the region's ECDI (minus 14) and ECDI-P (minus 30) below zero and so indicative of overall economic activity continuing to undershooting market expectations.

Production in January is expected to rise 0.5 percent after falling 1.1 percent in December. Consensus for the year-over-year rate is 0.3 percent.

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.