In January, euro zone industrial production dropped by 3.5% M/M, while the consensus was looking for a decline by 4.0% M/M. The previous outcome was downwardly revised from -2.6% M/M to -2.7% M/M. Looking at the details, capital goods (- 6.0% M/M) dropped sharply, but also intermediate (-3.6% M/M) and durable consumer goods (-2.6% M/M) showed significant declines. Non-durable consumer goods fell by 1.1% M/M, while energy was down by 1.6% M/M. Although industrial production came out better than expected, both the monthly and yearly figures showed the sharpest decline since the series started in 1985 and in the coming months production is forecasted to remain weak which indicates that industrial production will remain a drag on growth in the first quarter of this year.