Industrial production surprisingly contracted in June. A 0.1 percent monthly dip was well off the market consensus, especially after taking on board a tidy downward revision to May. The fall means that output has contracted in each of the last three months and leaves goods production at its lowest level since September 2020, in the midst of the pandemic.

However, the setback was restricted to consumer non-durables which were down fully 2.5 percent versus May. By contrast, consumer durables were up a hefty 3.8 percent and there were gains too in intermediates (0.7 percent), capital goods (0.9 percent) and energy (1.9 percent).

Regionally the headline slide masked rises in France (0.7 percent), Germany (1.6 percent), Italy (0.5 percent) and Spain (0.4 percent). Rather it reflected weakness among some of the smaller member states, notably Ireland (minus 7.8 percent), Portugal (minus 3.7 percent), Croatia (minus 3.7 percent) and Lithuania (minus 2.2 percent).

The June data leave second quarter Eurozone industrial production 0.4 percent below its first quarter level, implying another hit to GDP growth. The region's goods producing sector continues to struggle and early business surveys have held out little hope of any real recovery this quarter. Today's reports put the Eurozone RPI at minus 11 and the RPI-P at minus 18, both measures showing just a limited degree of overall economic underperformance versus market expectations.

Production in June is expected to rise a monthly 0.7 percent after a 0.6 percent decline in May. June will need at least a 3.3 percent monthly surge just to keep second-quarter output flat.

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.