Global| Oct 12 2017EMU Area IP Jumps
Summary
Euro area industrial production is jumping in August as its 1.4% gain is the largest one-month spurt since November last year when it gained 1.6% in one month. Manufacturing growth is up by 1.7% in August and up at a 5.9% annual rate [...]
Euro area industrial production is jumping in August as its 1.4% gain is the largest one-month spurt since November last year when it gained 1.6% in one month.
Manufacturing growth is up by 1.7% in August and up at a 5.9% annual rate over three months. This is down from a 7.5% annual rate gain over six months but above the 12-month pace of 4.1%. Intermediate goods and capital goods are the leading sectors. Capital goods output is expanding at an 8.7% annual rate over three months, nearly even with its six-month pace of 8.8% and nearly to double its year-on-year pace of 4.6%. Intermediate goods are up at a 7.7% pace over three months, above their 7.0% pace over six months and on an accelerating run compared to the sector's 5.0% gain over 12 months. Consumer goods output is up at a relatively weak 1.1% over three months, down from its 7.1% pace over six months and below its 12-month pace of 2.0%. Both durable and nondurable goods output have slowed; nondurable goods output is up at a growth rate of less than 1% over three months.
This is not a recovery rising on the back of the consumer. Capital good and intermediate goods output are leading the parade with consumer goods output trailing.
In the quarter-to-date, output appears a bit more balanced. Two months into Q3, capital goods output is up at a 9.6% annual rate. Intermediate goods output is up at a 7.2% annual rate and consumer goods output is up at a weaker but still quite strong 3.9% annual rate.
Looking the breadth of output in the euro area, we find that manufacturing output in August is rising in 9 of 11 of the original EMU members. The U.K. shows a gain in output as well while Sweden and Norway both show output drops in August. July has seen only 3 drops among EMU members after June had showed a region-wide collapse with gains in only two members: Italy and Luxembourg.
But output is back on an expanding path with gains being exhibited in all sectors. The incoming data on industrial output is beginning to support the strong readings having been offered by the PMI reports.
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
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