Industrial output falls again in October
Industrial output dropped a seasonally-adjusted 0.5% over the previous month in October, following September’s 0.1% dip. The reading matched market expectations.
Growth in production of non-durable consumer goods weakened from the previous month, while capital goods production swung from expansion to a notable contraction in October. However, production of both durable consumer goods and intermediate goods rebounded and energy output declined at a slower pace than in the prior month.
Looking at the individual economies for which data is available, industrial production contracted in 11 countries in October, including Germany, Italy and Spain. On the flip side, it expanded in France and Portugal, among others.
On an annual basis, industrial production fell 2.2% in October, a sharper contraction than September’s 1.8% drop. Lastly, annual average variation in industrial production slumped to minus 2.2%, the worst reading since September 2013 (September: -1.8%).
Commenting on the release, Peter Vanden Houte, Eurozone chief economist at ING, stated:
“The question we have to ask ourselves now is whether the sentiment data has entirely based on hopes for improvement, while the underlying economic situation doesn’t show much signs of recovery. Admittedly, industrial production is only a small part of the eurozone economy and a better situation in the services sector could more than compensate for the industrial weakness. However, the risk is that the longer the industrial malaise lasts, the more likely contagion to other sectors becomes. With industrial companies shedding employees, consumer confidence might get hurt, which could lead to a slowdown in consumption.”