EMU Industrial Production Falls Again

Industrial production in the European Monetary Union fell by 0.7% for the headline series that excludes construction. Output on this gauge also fell by 1% in September. It is also the second month in a row of manufacturing output declining. Output trends for manufacturing, for manufacturing sectors and for 13 of the oldest members of the union show broad declines and ongoing declines in industrial production.

Manufacturing- The headline series shows a negative growth rate over 12 months, six months and three months; while the declines are of a slightly lesser magnitude over shorter durations, that trend shift is minor. For manufacturing, there is an IP decline of 6.1% over 12 months, a decline at a 7.4% annual rate over six months and then a slower decline at a 3.4% annual rate over three months.

Sector trends- Looking at sectors, consumer goods hint at a slowdown in the rate of contraction with a 7.6% decline in output over 12 months that's reduced to a 1.6% annual rate decline over six months and to a 2.5% annual rate decline over three months. Intermediate goods output shows a less optimistic trend, but not a clear changing trend with output falling 4.1% over 12 months; the decline scales back to an annual rate of -3.6% over six months and then the decline steps up to a 5.2% annual rate over three months. Capital goods output shows a decelerating pace amid an ongoing contraction of output, with output falling 7.4% over 12 months, backing down to a -6.3% annual rate over six months and reduced further to a 2.9% decline over three months.

Member country trends- Among the 13 monetary union reporters on the table, six of them show declines in output in October that's after ten reported declines in September, and six reported declines in August. Over three months seven of these members show output declines; over six months eight members show output declines; and over 12 months nine members experience output declines. The quarter-to-date calculations, one month into the fourth quarter, show six of these reporters with output declining early in the quarter.

Growth rate rankings- The far-right column in this table ranks growth rates by country and by overall manufacturing sector on data back to October 2006. On this basis, all the sectors report growth rates that rank at least in the bottom 20% of their respective historic queues on this timeline. Consumer goods output, and particularly consumer goods output for nondurables, is especially weak. Among the EMU member countries reporting in this table, Ireland alone reports the weakest growth in manufacturing IP it has had during this whole period. Greece, surprisingly, logs growth that's in the top 4% of all its historic growth rates on this timeline. Only four countries report growth rates above their 50th percentile rank, which means only four have growth rates that are above the median growth rate for this span. Growth rates rank extremely low with an average ranking of about 36% and the median ranking in the 30th percentile.

Summing up On balance, output in the European Monetary Union remains weak; it continues to weaken. However, a metric at the bottom of this table does suggest that output over 12 months, six months and three months has had a greater tendency to accelerate than to decelerate across members even though there is protracted weakness across sectors and across the Monetary Union members. One of the things this may be indicating is that negative readings have not been quite as deeply negative as in previous periods. I know it's a thin read for optimism but it's all there is. Industrial output continues to deteriorate; the pace of deterioration is not so clearly worsening and the breadth of the declines across countries is not worsening either.