EU industrial production falls again
Euro area industrial production continued to fall at the end of last year, official data showed on Wednesday.
Industrial production in the eurozone fell 0.9% in December compared to the preceding month, a report from statistics agency Eurostat showed, much more than the forecast 0.4% decline and following the 1.7% fall in November.
Compared to December the previous year, IP was down 4.2%, with the deceleration stepping up from the 3.0% drop in November and worse than the 3.2% that economists had expected.
While a rise of 0.8% in France and 0.2% in Germany was already known, the Eurostat data showed that Italy slide 0.8%, Spain drop 1.4% and Ireland tumble 13.4%.
With earlier hiccups for the automotive sector easing, December saw production of durable consumer goods rebounding further, indicating that the auto sector is revving up again. Vehicle production was up 8.2% helped by a 9.9% jump in Germany. Output from the volatile energy sector fell by only 0.4%.
Stripping out autos, IP fell 1.8% on the month, with capital goods production down 1.5%.
Overall, these data are a bit worse than expected, said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.
The fall in industrial production, 0.2pp below his initial estimates, "supports our view that tomorrow’s second Q4 quarter-on-quarter GDP estimate will be revised down slightly, by 0.1 percentage points to 0.1%".
"That said, these data don’t tell investors anything that they didn’t already know. Manufacturing in the EZ has been stung by slower growth in global trade a whole hosts of one-off factors, the latter which appear to be fading at the start of the 2019. All eyes are on the Q1 hard data now for signs of stabilisation or, perhaps, even a modest upturn."
The fall confirms that there was a broad-based slowdown in the bloc at the end of last year, said Andrew Kenningham, chief Europe economist at Capital Economics, not just problems in one or two sectors or countries.
He suggested the fall in capital good production could suggest that business investment at home and abroad has declined.
"The downturn will serve to keep worries about a possible euro-zone recession alive," he said, but added: "For now we suspect that the industrial sector will perform a little better at the start of this year, in line with the manufacturing PMI. And other parts of the economy should do better than industry. However, the risk of an outright recession has clearly risen."