Eurozone: Industrial Output Up In April
BNP Paribas | Jun 12, 2013 08:56AM ET
Industrial production rose by 0.4% m/m in April up for the third month in a row. Survey data seems to suggest that output might continue to increase, although moderately, over the coming months.
Industrial production rose by 0.4% m/m in April, up for the third month in a row. Output is still below the level recorded last year, although the gap is narrowing. The working day adjusted index was down by 0.6% y/y. Contractions were -1.4% y/y and -3.2% y/y in March and February respectively.
■ The breakdown sent mixed signals. Production fell by more than 1% over the month in the energy sector (a downward correction was likely after bad weather boosted activity in the sector over the winter). By contrast, capital goods production continued to gain momentum. Lastly, production of consumer goods remained flat, reflecting the weakness of domestic demand.
■ The April rise was driven mainly by the positive performance of Germany and France (see EcoFlash “Germany: Industrial output sharply up in April” and “France: Catch-up in April Production”), while output in other countries was rather disappointing. As stressed above, weather conditions might have added some volatility. The Netherlands, for instance, recorded significant increases in production in both February and March, due mainly to strong demand for energy products linked to the cold winter. Not surprisingly, April figures recorded a downward correction, with total output (ex-construction) down by more than 4% over the month.
■ Survey data has shown some incipient signs of improvement, which might suggest that output might continue to increase over the coming months, although at modest pace. This is welcome news for Q2’s prospects. Industrial output will probably be much higher than in Q1. Assuming zero growth in May and June, industrial output will increase by more than 1% q/q in Q2, while in Q1 it was almost flat and GDP fell by 0.2% q/q. Yet other factors are still weighing on domestic demand such as tough labour market conditions and tightening credit conditions, mainly in peripheral countries. Against this backdrop, retail sales fell again in April, down for the third month running. Last but not least, floods in northern Europe in May might have a non-negligible impact on Q2 output results.
BY Clemente DE LUCIA
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