"Brisk start" to December quarter output in euro-zone

Summary: Euro-zone industrial production increases by 1.1% in October; less than 1.5% expected figure; annual growth rate slows to 3.3%; “brisk start” to December quarter, production just below February 2020 high; production up in two of euro-zone’s four largest economies, including Germany.

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 which then took over a year to claw back. However, production levels have since slid back below those from late 2019.

According to the latest figures released by Eurostat, euro-zone industrial production increased by 1.1% in September on a seasonally-adjusted and calendar-adjusted basis. The rise was not quite as large as the 1.5% increase which had been generally expected but it was in contrast to September’s 0.2% fall after revisions. On an annual basis, the calendar-adjusted growth rate slowed from September’s revised rate of 5.1% to 3.3%.

ANZ senior economist Catherine Birch described the increase as “a brisk start to the quarter” and noted industrial production index “is now just below the February 2020 high, almost a complete recovery despite supply chain issues.”

German and French sovereign bond yields increased modestly on the day. By the close of business, German and French 10-year bond yields had each added 2bps to -0.37% and -0.02% respectively.

Industrial production growth expanded in two of the euro-zone’s four largest economies, including Germany. Germany’s production grew by 3.0% while the comparable figures for France, Italy and Spain were +0.9%, -0.6% and -0.6% respectively.

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