German Industrial Production Is the Big News But There's Also News on Industrial Production in Emerging Economies

A diverse group of countries reported Industrial Production data for August. Most important was that of Germany, the largest European economy. The other reporting countries were relatively small nations among the emerging economies of Eastern Europe, the Middle East and the Pacific Rim, namely, Slovakia, Jordan and Turkey and Malaysia.

We have adjusted all the indexes to a common base 1999=100. The choice of base was limited to 1999 because data for Jordan, which has a base of 1999=100, were not available for any of the other base years--2000 for Germany and Slovakia, 1997 for Turkey and 1993 for Malaysia.

German Industrial Production rose almost 2% from July and was over &% above August, 2005. The rise exceeded consensus estimates and suggests a solid increase in GDP in the third quarter. In terms of magnitude, which cannot be discerned from index numbers, Germany far outweighs the other nations reporting today. But in terms of growth rates, which can be derived from index numbers, the smaller nations doubled or tripled Germany's growth during this period. Industrial production in Germany is only 17% above the average of 1999, while the comparable figure for Slovakia, for example, is 61%. The first chart compares the growth in industrial production in Germany and in Slovakia.

Among the small nations reporting today, Malaysia and Slovakia have been the fastest growers.Malaysian industrial production in August was 66% above the 1999 average and, as noted above, the comparable figure for Slovakian industrial production was 61%. The second chart shows that Malaysia and Slovakia have experienced similar trends in industrial production since 1999.

While industrial production in Turkey and Jordan is currently about 40% above the average of 1999, Jordan reported a decline of almost 8% in August from July and a 2.7% decline from August 2005. Economic conditions in Jordan, have probably been affected by the turmoil in the Middle East during the summer months. Turkey, on the other hand reported a 1.% increase in industrial production in July and almost a 5% increase over August, 2005. Since, January 2002, the first date that data for Jordan are available, both Jordan and Turkey have shown similar growth rates, as shown in the third chart. Currently, industrial production in Jordan is 38% above the average of 1999 while that of Turkey is 41%.