In recent months, industrial production has generally stagnated, but there are large differences between countries. In August, industrial production fell the most in the Netherlands (-1.4% mom), Belgium (-1.8% mom) and Croatia (-2.2% mom), but grew a stellar 6% mom in Ireland , 4.5% month-on-month. % month-on-month in Slovakia and 3.7% in Lithuania. The eurozone’s three largest economies (Germany, France and Italy) remained de facto stagnant.
Looking ahead, production expectations have stabilized somewhat recently. However, the tight order book and high inventories, combined with the recent rise in oil prices and renewed geopolitical uncertainty, do not bode well for the outlook for industrial production in the coming months.
For GDP growth in the third quarter, today’s industrial production data brought little relief. In fact, industrial production is still around 1% down for the quarter, and an additional strong growth figure would be needed in September to avoid industrial contraction. In its minutes from the September meeting, the European Central Bank appeared surprised by the weaker-than-expected performance of the eurozone economy so far. Today’s industrial production data suggests that these negative surprises could easily continue.