Goods production ended the first quarter on a surprisingly weak note. A 3.4 percent monthly slump was more than three times steeper than the market consensus and easily more than reversed February's marginally larger revised 2.1 percent gain. This was the sector's worst performance since March 2022 although with base effects strongly positive, annual growth still accelerated from 0.8 percent to 1.6 percent. That said, output was still some 5.8 percent below its pre-pandemic level in February 2020.

Manufacturing fared little better, posting a 3.3 percent monthly fall with motor vehicles and parts down 6.5 percent. Capital goods decreased 4.4 percent, intermediates 3.5 percent and consumer goods 0.1 percent. Elsewhere, construction also fell 3.3 percent but energy rose 0.8 percent.

March's hefty setback came after a cumulative 5.9 percent advance in January/February and so still makes for a positive first quarter by the sector. In fact, total industrial production was up a healthy 2.4 percent versus the fourth quarter of last year. Even so, with March manufacturing orders nosediving some 10.7 percent, the recovery is now looking a good deal softer than seemed likely previously. Moreover, with the German ECDI and ECDI-P now at minus 28 and minus 20 respectively, economic activity in general is also running somewhat cooler than market expectations.

Industrial production in March is expected to fall 1.0 percent on the month following a 2.0 percent monthly jump in February that was, for a second straight month, 2 full percentage points above the consensus. The year-over-year comparison is seen improving to 1.3 percent growth versus growth of 0.7 percent.

Industrial production measures the physical output of the nation's factories, mines and utilities. Data are collected from companies in the sector with fifty or more employees and include mining and quarrying, manufacturing, energy and, in contrast to its Eurozone counterpart, construction.

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.

Like the manufacturing orders data, the production index has the advantage of being available in a timely manner giving a more current view of business activity. Those responding to the data collection survey account for about 80 percent of total industrial production. Like the PPI and the orders data, construction is excluded.

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.