Eurozone industrial production falls in September though outlook has improved - ING

Bert Colijn, Senior Economist at ING, suggests that the industrial production remains sluggish and headwinds abound, but the short-term outlook for Eurozone industry is not all that bad.

Key Quotes

“Industrial production in the Eurozone disappointed as it dropped by 0.8% MoM in September, but after a strong August this meant that the third quarter still ended with growth of 0.4% QoQ. Industrial production has been very volatile this year, with most monthly gains offset by losses in the month after. Compared to September last year, production is up by 1.2%, meagre given the current stage of recovery and the stronger performance of overall GDP. With political uncertainty hampering investments and real incomes falling as inflation is picking back up at the moment, the question is whether volatility and sluggish growth will continue to plague Eurozone industry in the winter months.”

“While it seems that Eurozone growth is still facing significant headwinds for the months ahead, most recent indicators show optimism for industrial production in the rest of the year. Capacity utilization is up substantially in the fourth quarter, which is closely linked to production. The PMI for manufacturing surged in October as businesses indicated that production, new orders and employment growth in the sector accelerated and new orders are now somewhat higher than in the beginning of 2016. This means that the outlook for industrial output is cautiously brighter for the end of the year, but no miracles can be expected in the current uncertain economic environment.”