Goods production fell again in July. A 0.8 percent monthly slide followed a marginally smaller revised 1.4 percent drop in June and means that output has now declined for three straight months for the first time since April-June 2021. The latest decrease was much steeper than the market consensus and reduced annual growth from minus 1.7 percent to minus 2.2 percent. The fall also left output some 7.4 percent below its pre-pandemic level in February 2020.

Manufacturing fared even worse, posting a 1.8 percent monthly drop largely on the back of a 2.9 percent slump in capital goods. Intermediates also fell 0.7 percent and consumer goods 1.0 percent. However, elsewhere, construction was up 2.6 percent and energy 2.2 percent.

The latest setback leaves overall industrial production in the latest three months down 1.9 percent versus the previous period. In addition, it puts output in July alone some 1.8 percent below its average level in the second quarter. With orders also plummeting in July, the near-term outlook for the goods producing sector remains grim. Today's update puts both the German ECDI and ECDI-P at minus 29 indicating that economic activity in general is similarly running some way behind market expectations.

After June's steep 1.5 percent monthly drop, industrial production in July is expected to fall a further 0.2 percent. The year-over-year comparison is seen decreasing 2.1 percent following June's 1.8 percent decrease.

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.