Goods production lost ground again in June. A 1.5 percent monthly decline was much steeper than the market consensus and, following a marginally shallower revised 0.1 percent dip in May, reduced annual growth from 0.1 percent to minus 1.8 percent. The fall also left output some 6.8 percent below its pre-pandemic level in February 2020.

Manufacturing fared little better, posting a 1.3 percent monthly drop largely on the back of a 3.5 percent slump in motor vehicles and parts . By contrast, pharmaceutical products and preparations (7.9 percent) picked up strongly. Capital goods fell 3.9 percent, but both intermediates (0.4 percent) and consumer goods (1.8 percent) recorded gains, Elsewhere, construction was down 2.8 percent but energy was up 0.6 percent.

June's setback leaves second quarter industrial production 1.3 percent below its level in the first quarter and so confirms a negative contribution from the sector to the period's GDP growth. The recent pick up in orders bodes rather better for coming months but business surveys show sentiment weak and a meaningful recovery looks some way off. Even so, today's update puts both the German ECDI and ECDI-P at 9 and 11 respectively, both measures showing that economic activity in general is running a little hotter than market expectations.

After May's 0.2 percent monthly decline, industrial production in June is expected to fall a further 0.5 percent. The year-over-year comparison is seen decreasing 0.4 percent following May's 0.9 percent increase.

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.