Industrial production beat expectations in May but a 0.6 percent monthly decline, the first fall since January, was still steep enough to see output hit its lowest level since October 2020. Base effects meant that annual workday adjusted growth edged up from minus 3.1 percent to minus 2.9 percent but this was its fifth consecutive sub-zero outturn.

The monthly setback reflected renewed decreases in intermediates (1.0 percent), capital goods (1.2 percent) and consumer durables (1.8 percent). Gains in non-durables (1.6 percent) and energy (0.8 percent) provided partial offsets.

Regionally the headline slide was led by Germany where production was down fully 2.4 percent versus April. France (minus 2.1 percent) and Spain (minus 0.2 percent) also had a poor month but Italy (0.5 percent) posted positive growth for the first time since last December.

The May data leave average Eurozone industrial production in the first two months of the quarter unchanged from their mean level in the first quarter when it contracted 0.9 percent. However, absent any revisions, June will need at least a 3.3 percent monthly gain just to keep second quarter output flat. The region's goods producing sector continues to struggle and almost certainly subtracted from GDP growth last quarter. Still, today's update lifts the Eurozone RPI to 16 and the RPI-P to 13 showing recent economic activity in general running slightly ahead of market forecasts.

Production in May is expected to fall a monthly 1.0 percent after slipping 0.1 percent in April. A meaningful recovery for Eurozone industrial production has been elusive.

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.