Industrial production continued to struggle in October. A surprisingly steep 0.7 percent monthly fall followed a marginally shallower revised 1.0 percent drop in September and means that output has declined in four of the last five months. Annual growth only edged up from minus 6.8 percent to minus 6.6 percent courtesy of favourable base effects and production now stands at its lowest level since November 2020.

October's setback was led by capital goods which fell a monthly 1.4 percent. Intermediates also decreased 0.6 percent as did consumer non-durables. Partial offsets were provided by consumer durables (0.2 percent) and energy (1.1 percent).

Regionally, France (minus 0.3 percent), Germany (minus 0.1 percent), Italy (minus 0.2 percent) and Spain (minus 0.6 percent) all lost ground and most other member states followed suit.

The October data put Eurozone industrial production 1.1 percent below its average level in the third quarter and so warns of another potential hit to economic growth in the current period. Accordingly, they also increase the chances of a recession by year-end. Today's report trims the Eurozone RPI to minus 15 and the RPI-P to minus 2. Overall economic activity is lagging expectations but, for now, only mainly due to the surprising weakness of prices.

Production in October is expected to fall 0.3 percent on the month after falling 1.1 percent in September. Consensus for October's year-over-year rate is contraction of 4.5 percent versus September contraction of 6.9 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.