Euro Area: Industrial output accelerates in June
Industrial production grew 0.5% month on month in seasonally adjusted terms in June (May: 0.0% mom). Looking at the details of the release, energy production rose compared to the prior month, while the output of durable consumer goods, capital goods, intermediate goods and non-durable consumer goods fell.
However, the rise was entirely due to a surge in production in Ireland. Excluding Ireland, industrial production fell 0.9% month on month in July. Data for Ireland is volatile due to the heavy presence of multinational firms. Shifts in intellectual property to subsidiaries in Ireland can artificially inflate or deflate Irish industrial production month on month.
Looking at individual countries for which data is available, industrial output increased in 5 countries and fell in 14. Focusing on the largest economies, industrial output fell in Germany, Italy, Spain and the Netherlands, while it rose in France.
On an annual basis, factory output fell 1.3% in June, which was better than May’s minus 2.4% reading. Meanwhile, annual average industrial production growth fell to 1.2% in June (May: +1.6%), signaling a worsening trend in the industrial sector.
Analysts at Berenberg said:
“A succession of overlapping shocks is tipping Europe’s export-orientated manufacturing sector into a downturn. This is bad news for the Eurozone, which earns more of its GDP through the export of goods than most other major advanced economies.”