Eurozone industry production - good start to 2Q14

This week, industry production data for April for Eurozone countries has been published. For the entire Eurozone, industrial production grew 0.5% when compared to the average for 1Q14. After growth of 0.3% in 1Q14, this is an acceleration of the growth pace that was heterogeneously split between countries. The positive development of industrial production in Portugal (+3.6%) and Spain (+1.6%) confirms that the recovery continues in the countries hit hardest by the crisis.

In bigger countries, the performance was a bit slower. For Germany, the values for April indicate slight growth of 0.2% when compared to the average reading of the first quarter. The production of consumption goods contributed largely to the growth. Supported by the mild winter weather in the first quarter, the construction sector clearly lost momentum in April (-2.5%). In Italy, industrial production grew as well, by 0.2% when compared to the average for 1Q14. However, since Matteo Renzi took over as the head of the government, survey data has improved markedly. Consumer confidence (for instance) has risen sharply above the long-term average (see graph). Based on the current survey data, Italy should thus gather momentum in the next few months. In France, industrial production declined slightly (-0.1%) when compared to the average for 1Q14. However, it is too early to make a proper assessment for the entire 2Q14 production development based solely on data from April. Nevertheless, one should keep a sharp eye on France, due to a prolongation of the weak survey data, which implies downward risks to our growth forecast.

On June 23, flash estimates of manufacturing PMIs for June will deliver further insights regarding the status of Eurozone industry. The mean of the poll data for April and May lies well above the growth threshold level of 50 and thus indicates ongoing production growth for Eurozone industry.