Industrial activity deteriorates in June

Latest reading: Industrial output declined 1.3% month-on-month in seasonally adjusted terms in June (May: +1.1% mom s.a.). Looking at the details of the release, both capital and non-durable consumer goods output swung to contraction, while energy production decelerated. That said, production of both intermediate and durable consumer goods decreased at a more moderate rate in June. Looking at specific countries, output plummeted in Germany and Ireland, while it rebounded in France and Italy, and accelerated in the Netherlands and Spain. On an annual basis, industrial production rose at a more moderate pace of 0.2% in June (May: +3.1% yoy), the worst result since January. Meanwhile, the trend improved, with the annual average variation of industrial production coming in at minus 0.1% in June, up from May's minus 0.5%.

Panelist insight: ING’s Carsten Brzeski commented: “After huge stockpiling in 2021 and 2022 and high inventories limiting production since then, the inventory cycle showed clear signs of turning in the first few months of the year. With the latest data, however, this turning of the inventory cycle seems to have been mainly driven by US frontloading and not by a genuine cyclical turning. In fact, at least at face value, today's industrial production data suggest that earlier signals of a turning inventory cycle currently rather look like a false start. The hoped-for industrial recovery seems to be delayed once again.”

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