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Eurozone industrial production takes a painful turn downwards - ING

FXStreet (Delhi) - Bert Colijn, Research Analyst at ING, notes that the industrial production in the Eurozone decreased by -0.5 percent in August, showing that European industry continues to struggle in the third quarter. The year-on-year growth rate also disappointed with just 0.9 percent growth, where 1.8 percent had been expected.

Key Quotes

“Industrial production in the Eurozone has in fact been disappointing throughout 2015, growing by only 0.4 percent since December last year. While cheap oil and a lower euro have boosted domestic demand in Europe, it has failed to improve industrial production, even though conditions for production have been generally favorable, which makes the current weak run of industrial production somewhat of a mystery.”

“A cheap euro, improving domestic demand, decreasing inventories, an increasing trend in new orders and upbeat producers have all failed to result in growth in industrial production in 2015. The exports of goods are of course under pressure because of the Chinese slowdown, but even though this is the case, hard drivers of production at home are all showing positive signs for the economy.”

“New orders for manufacturing increased at the fastest pace since 2011 on a 6-month basis in July. Also inventories are running down rapidly in the Eurozone since the third quarter of last year. As the PMI is also indicating that output is expanding modestly in the manufacturing sector, it seems that the outlook for the rest of 2015 remains positive.”

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