Industrial production surprised markedly on the upside at year-end. Output climbed fully 2.6 percent on the month and that after November's 0.3 percent fall was revised to a 0.4 percent rise. The December jump was the steepest since August 2022 and made for the first back-to-back increase since January/February last year. Annual growth improved from minus 5.4 percent to 1.2 percent, its first positive print since February 2023, and production now stands at its highest level since last February.

December's remarkable monthly leap was largely attributable to capital goods which were up fully 20.5 percent, in no small way it seems to reflect a huge spike in Ireland. Elsewhere, intermediates fell 1.2 percent but consumer durables were up 0.5 percent, non-durables 0.2 percent and energy 0.3 percent.

Regionally, France and Italy (both 1.1) posted solid advances but Germany (minus 1.2 percent) and Spain (minus 0.4 percent) saw fresh losses.

The latest data provide a misleadingly strong impression of Eurozone manufacturing at the end of 2023. The Central Statistics Office in Ireland, where industrial production rose some 23.5 percent in December after a 7.3 percent increase in November, is currently reviewing its data and recent swings here have clearly distorted the headline Eurozone figures. The most likely case is that the region's goods producing sector is still struggling. That said, with the region's RPI at 8 and the RPI-P at 21, overall economic activity is at least running a little ahead of forecasts.

Production is seen falling a further 0.3 percent on the month but positive base effects should boost annual growth from minus 6.8 percent to minus 4.1 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.