Euro area industrial production grows strongly year-on-year in August

Economic data for the euro area released on Wednesday continued to be in line with ongoing strong expansion in the currency bloc. Industrial production in the euro area rose 0.1 percent sequentially in July. However, that meant that the annual rate rose 0.4 percentage points to 3.2 percent year-on-year. This is one of the strongest readings of the last six years, with output of consumer, capital and intermediate goods rising on a three-month basis at an annualized pace of 4 percent or more.

Sequentially, the 0.1 percent rise in industrial production is due to the production of capital goods, durable goods and intermediate goods that rose 0.8 percent, 0.7 percent and 0.5 percent, respectively. Meanwhile, production of non-durable consumer goods dropped by 0.4 percent and energy by 1.2 percent. the highest increases in industrial production sequentially was seen in France, whereas the largest decreases were recorded in Malta and Slovakia.

On a year-on-year basis, durable consumer goods, intermediate goods, capital goods and energy all rose 5.7 percent, 4.8 percent, 4.3 percent and 1.2 percent, respectively, leading to the rise in the headline print. Meanwhile, production of non-durable consumer goods dropped 0.5 percent year-on-year. Highest increases were seen in Latvia and Slovakia, whereas the decreases were recorded in Malta.

The trend seen in today’s industrial production report is fully in line with the findings of recent surveys such as the manufacturing PMIs, for which the headline index rose in August to match June’s six-year high and the new orders index hints at the ongoing growth close to the recent pace. Encouragingly, strong growth in the sector is now broad based throughout the euro area, with each of the three largest member states recording annual growth above 3.5 percent year-on-year in July.

At 16:00 GMT the FxWirePro's Hourly Strength Index of Euro was slightly bearish at -71.1434, while the FxWirePro's Hourly Strength Index of US Dollar was bullish at 92.1133. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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