–But Leading Indicators Point To Slowdown Ahead
August: +1.0% m/m, +7.9% y/y
MNI survey median: +0.9% m/m, +8.0% y/y
MNI survey range: -0.5% to +1.2% m/m
July: +0.1% m/m (revised from flat)
June: -0.1% m/m (revised from -0.2%)
May: +1.2% m/m (revised from +1.1%)
April: +0.7% m/m (revised from +0.8%)
March: +1.8% m/m (unrevised)
—
PARIS (MNI) – Much as expected, Eurozone industry expanded strongly
in August, with robust gains in most sectors offsetting a setback in
energy and non-durable consumer goods, Eurostat said Wednesday, citing
preliminary seasonally adjusted data.
Taking account of minor upward revisions for previous months, the
1.0% monthly spurt left output 7.9% higher on the year, but still more
than 12% below pre-crisis peaks. July-August output was 0.9% above the
2Q average, which rose 2.4% on the quarter; the three-month moving
average slipped to +0.3% from +0.4% in July.
Capital goods output surged 3.0% in August, giving an 11.2% rise on
the year. After a marked slowdown in June and July, the return to
dynamic growth rates is a promising signal.
Intermediate goods output rebounded 1.4% on the month for a gain of
10.8% on the year. Consumer durables were up 1.8% on the month and 7.3%
higher on the year, while non-durables dipped 0.2%, retracing the July’s
gain for a 4.0% annual increase.
Energy output fell 0.7%, the fifth decline in the past seven
months, and was only 0.7% higher on the year.
Upside surprises in Germany and Italy in August offset a
disappointment in France.
German industry output rose 1.8% on the month on the back of strong
gains for capital goods and consumer durables. The 3.4% rebound in
manufacturing orders in August should assure sustained growth in the
near term.
Indeed, German manufacturers’ assessment of current conditions
improved further in September to a two-year high, Ifo’s survey showed.
However, prospects at the six-month horizon eroded slightly, reflecting
an expected slowdown in demand from abroad.
In France, output stagnated in August, as a setback in the
agro-industry offset gains in most other sectors, leaving production
only 3.3% higher on the year.
The Bank of France’s survey signaled a pick-up in output across all
sectors in September but suggested that growth might wane somewhat in
the following months. Manufacturers polled by Insee in September also
said recent production had lost steam. But with orders rising,
especially from abroad, they were much more optimistic about near-term
prospects.
Italian production surged 1.6% in August, bolstered by a spike for
capital goods. Isae’s survey of Italian manufacturers in September
signaled weaker orders both at home and abroad, but improving prospects
for demand and production in all main sectors. The institute expects
sector output to drop 1.4% in September, then rise 0.5% in October and
1.6% in November.
In Spain, output recovered 0.7% on the month, for a gain of 1.4% on
the year. Producers polled by the European Commission in September said
output continued higher, but they were increasingly pessimistic about
near-term trends.
In the smaller economies, solid monthly gains in most reporting
countries offset a steep setback in Ireland (-13.6%). Growth rebounded
sharply in Greece (+5.6%), Slovenia (+5.2%), Portugal (+3.8%), Finland
(+3.3%) and Luxembourg (+2.8%), flanked by more modest gains in Malta
(+0.9%) and the Netherlands (+0.5%).
Output in all reporting countries was higher on the year except in
Greece (-3.0%), with the strongest annual gains in Luxembourg (+11.8%),
Germany and Slovenia (both +11.5%), Ireland (+9.6%) and Italy (+9.5%).
Leading indicators for the Eurozone as a whole point to a slowdown
in the months ahead. Industry orders dropped 2.4% in July, retracing the
rise in June. The September factory PMI showed output expanding at the
slowest pace (54.0) in nearly a year and even weaker growth in orders
(53.2). Only the Commission’s survey pointed to a modest pick-up in
production in the near term.
The joint forecasts of Ifo, Insee and Isae see Eurozone industry
growth slowing to 0.9% in 3Q and to 0.5% in 4Q and 1Q.
“External demand should soften in line with the deceleration of
growth in the US, as well as in emerging Asia and Latin America,” the
institutes predicted last week. “Moreover, the prospects of a reversal
of fiscal policy towards consolidation in many member states are likely
to exert a dampening effect on domestic demand.”
–Paris newsroom +331 4271 5540; e-mail: stephen@marketnews.com
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