Euro area industrial output growth likely to have eased in February

Industrial production growth in major euro area economies last week sent mixed signals. Industrial production in Germany fell 1.6 percent sequentially in February, but the equivalent indicator rose at a similar rate in Spain. Furthermore, today’s French figures were more in line with the latter. After a steep fall of 1.8 percent sequentially at the beginning of the year, production rose 1.2 percent sequentially in February.

Activity in the mining, quarrying and energy production category rose 11.5 percent sequentially, while in construction it rose by 2.8 percent. However, manufacturing output was disappointing, falling for the fourth straight month, by 0.6 percent. The January-February average came in 1.2 percent lower compared to the fourth quarter. This implies that French industrial production is expected to record a decline in the first quarter, noted Daiwa Capital Market Research in a report.

Meanwhile, Italian industrial sector was hardly any more positive. The total IP fell 0.5 percent in the month after a fall of 1.8 percent in January. The energy sector output rose 8.1 percent sequentially, boosted by particularly cold weather. However, all the other major categories saw output fall. So far the figures imply that total production in Italy is also on track to record a decline in output in the first quarter, unless there is a significant rebound in March.

“And ahead of the euro area industrial production data release on Thursday, results from all four largest member states combined currently are consistent with a drop of a few tenths”, stated Daiwa Capital Market Research.

At 21:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at 44.2214, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -61.8191. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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