Summary: Euro-zone industrial production up 0.2% in May, less than expected; annual growth rate decreases from +0.1% to -2.2%; German, French 10-year yields move substantially lower; output expands in three of four largest euro 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 recent quarters have generally stagnated in trend terms.
According to the latest figures released by Eurostat, euro-zone industrial production expanded by 0.2% in May on a seasonally-adjusted and calendar-adjusted basis. The result was a little less than the 0.3% expansion which had been generally expected and down from April’s 1.0% increase. The calendar-adjusted growth rate on an annual basis went into reverse, from April revised rate of 0.1% to -2.2% in May.
German and French sovereign bond yields moved substantially lower on the day. By the close of business, the German 10-year bund yield had shed 10bps to 2.44% while the French 10-year OAT yield finished 11bps lower at 3.00%.
Industrial production expanded in three of the euro-zone’s four largest economies. Germany’s production declined by 0.2% over the month while the comparable figures for France, Spain and Italy were 1.3%, 0.7% and 1.6% respectively.