Summary: Euro-zone industrial production down 2.3% in July, fall greater than expected; annual growth rate swings from +2.2% to -2.4%; German, French 10-year yields decline modestly; contracts in three of euro-zone’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 which then took over a year to claw back. Production levels in more-recent months has generally stagnated.
According to the latest figures released by Eurostat, euro-zone industrial production contracted by 2.3% in July on a seasonally-adjusted and calendar-adjusted basis. The fall was greater than the 1.1% decrease which had been generally expected and in contrast with June’s 1.1% increase after revisions. The calendar-adjusted growth rate on an annual basis swung from June’s revised rate of +2.2% to -2.4%.
German and French sovereign bond yields declined modestly on the day. By the close of business, the German 10-year bund yield had lost 2 bps to 1.70% while the French 10-year OAT yield finished 1bp lower at 2.27%.
Industrial production contracted in three of the euro-zone’s four largest economies. Germany’s production shrank by 2.0% over the month while the growth figures for France, Spain and Italy were -7.3%, +5.7% and -0.4% respectively.