Euro area manufacturing output likely to have dropped in January

Industrial production data from euro area’s large member states surprised on the downside. In France, widely coinciding with a moderation in economic survey indicators since the beginning of the year, industrial output dropped 2 percent sequentially, the steepest fall since June 2011.

Manufacturing output fell by 1.1 percent sequentially, while mining and quarrying and energy output fell 6.7 percent sequentially. Construction output also fell, dropping 7.6 percent sequentially, to more than fully reverse the very solid rise of 5.2 percent sequentially in December and leave the level just 0.3 percent higher than a year earlier.

Unlike in Germany, the underlying growth trend in France seems to have moderated considerably at the beginning of the year, with the three-month on three-month rate falling to just 0.3 percent for both overall industrial production and manufacturing, down from 1.6 percent and 2 percent in the fourth quarter. In Spain, the industrial production fell 2.6 percent sequentially, the steepest drop since 2012. But after three straight rises of about 1 percent sequentially, the three-month growth rate of 1.4 percent was still respectable, although almost 1 percentage point down on its value in December.

“Taking the German, French and Spanish figures together, we expect a drop in euro area manufacturing output in January of around ½ percent M/M”, noted Daiwa Capital Market Research in a report.

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