Summary: Euro-zone industrial production creeps higher in March; expansion less than expected; annual growth rate jumps above zero on “base effects”; expansion in three of eurozone’s 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 but subsequent months in 2020 and early 2021 produced an almost complete recovery.
According to the latest figures released by Eurostat, euro-zone industrial production increased by just 0.1% in March on a seasonally adjusted and calendar-adjusted basis. The expansion was noticeably smaller than the 1.0% increase which had been generally expected but it was also in contrast with February’s 1.2% contraction. On an annual basis, the calendar-adjusted growth rate jumped from February’s rate of -1.6% to +10.9%. (Production collapsed in March 2020, resulting in a significantly lower base for annual calculations.)
German and French 10-year sovereign bond yields moved higher on the day. By the close of business, the German 10-year bund yield had added 4bps to -0.12% and the French OAT yield had gained 5bps to 0.27%.
Industrial production growth expanded in three of the eurozone’s four largest economies. Germany’s production expanded by 0.8% while the comparable figures for France, Italy and Spain were +0.7%, +3.4%, and -0.1% respectively.