Industrial output in euro-zone jumps in July

Summary: Euro-zone industrial production up 1.5% in July, triple expected figure; annual growth rate falls, “base effects” still present; production up in all four of euro-zone’s largest economies.

Following a recession in 2009/2010 and the debt-crisis which flowed from it, euro-zone industrial production recovered and then reached a peak four years later in 2016. Growth rates then fluctuated for two years before beginning a steady and persistent slowdown from the start of 2018. That decline was transformed into a plunge in March and April of 2020 and it has taken fifteen months to claw back these losses.

According to the latest figures released by Eurostat, euro-zone industrial production jumped by 1.5% in July on a seasonally-adjusted and calendar-adjusted basis. The rise was triple the 0.5% increase which had been generally expected and in contrast to June’s 0.1% contraction. On an annual basis, the calendar-adjusted growth rate slowed from June’s revised rate of 10.1% to 7.7%.

(Monthly production figures collapsed during the June quarter of 2020, resulting in significantly lower bases for annual calculations. i.e. “base effects”.)

German and French sovereign bond yields rose moderately on the day. By the close of business, German and French 10-year bond yields had both gained 4bps to -0.31% and 0.02% respectively.

Industrial production growth expanded in all of the euro-zone’s four largest economies. Germany’s production grew by 1.0% while the comparable figures for France, Italy and Spain were +0.3%, +0.8% and +0.3% respectively.

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