Eurozone: Industrial production surprised on the upside in August - ING

Bert Colijn, Senior Economist at ING, notes that the Eurozone industrial production increased by 1.6% in August, wiping out July’s losses but still, it does not look like European industry has managed to shift out of neutral.

Key Quotes

“Strong growth in production in Germany, France, Italy and Spain boosted August’s industrial output growth. July’s declines were revised down, painting a friendlier picture of the industrial environment, which looked rather bleak during the summer months. While some economic surveys plummeted across Europe in August, suggesting a delayed Brexit response, production itself showed a completely different picture.

The outlook for industry remains subdued though and a scenario of muddling through seems the most likely option. New orders remain almost 5% below the June 2015 peak and the PMI for manufacturing is also not yet at the level of the end of last year. While that is the case, the PMI did increase in September, so there might be some momentum for the end of the quarter. As July’s weak industrial production was revised upwards, a small decline of 0.3% MoM in September would still result in quarterly growth. For Q3 GDP growth, this would not make a big difference though. The picture of an economy that fails to pick up the pace persists and this industrial production reading fits that view.”