Industrial production rebounded strongly, although only in line with expectations, in August. A 1.8 percent monthly spurt drop was the strongest since February last year and, following a slightly steeper revised 0.5 percent fall in July, boosted yearly growth from minus 2.1 percent to 0.1 percent. Goods output now stands at its highest level in 2024 to date.

August's recovery was dominated by capital goods which climbed fully 3.7 percent on the month. Consumer durables (1.7 percent) and non-durables (0.2 percent) also made ground as did energy (0.4 percent) but intermediates (minus 0.3 percent) extended their solid trend decline.

Regionally the headline gain was led by Germany where production full reversed July's 3.3 percent slump. France (1.4 percent) similarly had a good month but Italy (0.1 percent) was little more than flat while Spain (minus 0.4 percent) posted a second straight loss.

Nonetheless, the August update puts average Eurozone industrial production in the first two months of the quarter 0.3 percent above the second quarter mean. Absent any revisions, September will need a monthly fall of at least 1.7 percent to prevent the sector from adding to third quarter GDP growth. It may be that the goods producing sector is on the turn but with surveys still showing falling demand and declining backlogs, such a call could prove very premature. In any event, today's report puts the Eurozone RPI at minus 1 and the RPI-P at 10. Overall economic activity is essentially matching market expectations despite surprisingly weak prices.

Eurozone industrial production is expected to rebound by 1.8 percent on the month in August after July's fall of 0.3 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.