| Consensus | Actual | Previous | |
|---|---|---|---|
| Month over Month | -0.2% | -1.5% | -0.2% |
| Year over Year | -3.1% | -1.1% |
Highlights
Industrial production fell again in November and much more sharply than expected. A 1.5 percent drop was the worst performance since last April and some 1.3 percentage points steeper than the market consensus. Following an unrevised 0.2 percent dip in October, the latest decrease reduced annual workday adjusted growth from minus 1.1 percent to minus 3.1 percent and means that output has still not expanded since August.
To make matters worse, the monthly slide was broad-based. Energy (minus 4.0 percent) was particularly weak but there were hefty losses too in consumer goods and intermediates (both minus 1.8 percent). Capital goods were off 0.2 percent. Over the latest three months, total industrial production fell 0.8 percent.
Absent any revisions, the mid-quarter report leaves December needing an improbably large 3.4 percent monthly rise just to keep fourth quarter output flat. Accordingly, the sector almost certainly weighed on GDP growth, as it did in four of the last five quarters. Even so, with the Italian RPI at exactly zero and the RPI-P at 10, if anything overall economic activity has recently been a little firmer than expected.
To make matters worse, the monthly slide was broad-based. Energy (minus 4.0 percent) was particularly weak but there were hefty losses too in consumer goods and intermediates (both minus 1.8 percent). Capital goods were off 0.2 percent. Over the latest three months, total industrial production fell 0.8 percent.
Absent any revisions, the mid-quarter report leaves December needing an improbably large 3.4 percent monthly rise just to keep fourth quarter output flat. Accordingly, the sector almost certainly weighed on GDP growth, as it did in four of the last five quarters. Even so, with the Italian RPI at exactly zero and the RPI-P at 10, if anything overall economic activity has recently been a little firmer than expected.
Market Consensus Before Announcement
Production is expected to repeat October's 0.2 percent monthly decline.
Definition
Industrial production measures the physical output of the nation's factories, mines and utilities. Construction is excluded. Approximately 4,100 companies provide data on more than 8,000 monthly flows of production.
Description
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 PPI and the orders data, construction is excluded from the data. 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.
