Summary: Euro-zone industrial production down 1.1% in December, fall slightly less than expected contraction; annual growth slows from 2.8% to -1.7%; German, French 10-year yields up; expansion in three of four largest economies, not Germany.
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 in more-recent months have generally stagnated in trend terms.
According to the latest figures released by Eurostat, euro-zone industrial production contracted by 1.1% in December on a seasonally-adjusted and calendar-adjusted basis. The result was slightly more than the 1.2% contraction which had been generally expected but in contrast with November’s 1.4% expansion after revisions. The calendar-adjusted growth rate on an annual basis slowed from November’s revised rate of +2.8% to -1.7%.
German and French sovereign bond yields moved higher on the day. By the close of business, the German 10-year bund yield had gained 4bps to 2.46% while the French 10-year OAT yield finished 5bps higher at 2.93%.
Industrial production contracted in the euro-zone’s largest economy, Germany, but expanded in the other three of the euro-zone’s four largest economies. Germany’s production decreased by 2.1% over the month while the comparable figures for France, Spain and Italy were +1.1%, +0.7% and 1.6% respectively.