German industrial production fell 0.4 percent on the month in March, weakening from a revised increase of 1.7 percent in February, and fell 3.3 percent on the year after a previous decline of 5.2 percent. More up-to-date PMI manufacturing survey data showed ongoing contraction in the sector in both March and April.

Production of consumer goods and intermediate goods fell by 1.4 percent and 0.6 percent respectively in March, partly offset by an increase of 0.1 percent in the output of capital goods. Industrial production excluding energy and construction also fell 0.4 percent on the month in March and fell 3.4 percent on the year. Energy production fell 4.2 percent on the month, while construction output increased 1.0 percent.

Weakness in today's data was less pronounced than the consensus forecast for a fall of 1.0 percent on the quarter and a year-over-year decline of 4.0 percent. The RPI rose from plus 11 to plus 21, while the RPI-P was unchanged at plus 21, indicating modest out-performance relative to consensus.

Industrial production in March is expected to fall 1.0 percent on the month after rising a stronger-than-expected 2.1 percent in February that followed January's upward revised 1.3 percent gain.

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.