Industrial production lost further ground in April. A surprise 0.1 percent monthly dip followed an unrevised 0.4 percent fall in March to yield the first back-to-back drop since September/October last year. However, annual growth still improved from minus 4.3 percent to minus 3.9 percent.

Manufacturing fared rather better with a 0.2 percent monthly rise. Capital and consumer goods increased 0.8 percent but intermediates fell 0.9 percent. Elsewhere, energy grew 1.6 percent but construction was down 2.1 percent.

Despite April's setback, the latest data put overall goods production in the last three months 1.0 percent higher than in the November-January period. This provides further evidence that manufacturing is on the turn. Even so, with new orders still falling and the sector PMI in May (45.4) still deep in contraction territory, the near-term outlook is hardly robust. To this end, today's update trims the German RPI to minus 11 and the RPI-P to minus 8. Overall economic activity is running slightly behind market expectations.

Industrial production in April is expected to rise 0.2 percent on the month after falling 0.4 percent in March.

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.