Summary: Euro-zone industrial production up 1.8% in August, in line with expectations; up 0.1% on annual basis; Westpac: capital goods production drives increase; German, French 10-year yields fall; Westpac: output growth still negative on 3-month basis; expansion in three of four largest economies.
Following a recession in 2009/2010 and the debt-crisis which flowed from it, euro-zone industrial production recovered and then reached a peak four years later in 2016. Growth rates then fluctuated for two years before beginning a steady and persistent slowdown from the start of 2018. That decline was transformed into a plunge in March and April of 2020 which then took over a year to claw back. Production levels since early 2023 have generally declined.
According to the latest figures released by Eurostat, euro-zone industrial production increased by 1.8% in August on a seasonally-adjusted and calendar-adjusted basis. The rise was in line with expectations and in contrast with July’s 0.5% contraction after revisions. On an annual basis, the contraction rate reversed course from July’s revised rate of -2.1% to 0.1%.
“Details revealed that production of capital goods led the way, while consumer goods and energy production were also higher compared to the prior month,” said Westpac economist Pat Bustamante.
Long-term German and French sovereign bond yields finished lower on the day. By the close of business, the German 10-year bond yield had shed 5bps to 2.22% while the French 10-year yield finished 6bps lower at 2.96%.
“However, it is worth highlighting that the increase in August followed a 0.5% drop in the total production in July, and on a three-month basis, output growth remained negative at -0.2%,” Bustamante added.
Industrial production expanded in three of the euro-zone’s four largest economies. Germany’s production increased by 3.3% over the month while the comparable figures for France, Spain and Italy were 1.4%, -0.4% and 0.1% respectively