Euro area's industrial production had dropped more than expected by 0.7% m/m in November. It is likely to fall 0.4% m/m in December. If the IP data is on par with this expectation, the Q4 data is expected to decline 0.1% q/q after growing slightly by 0.2% in Q3. The decline in industrial output is mainly due to fall in energy output given the mild weather in November and December. However, strong growth in October of 0.6% m/m in total industry and energy will cushion the Q4 data.
"On a country-by-country basis, we have already seen weakness in Germany (-1.2% mom) and expect poor numbers from France (-0.3% mom) and Italy (-0.7% mom) and, to a lesser extent, Spain (0.3% mom)", says Societe Generale.
Energy production in the euro area is expected to recover as temperatures in January have been nearer to average. Meanwhile, the PMI and EC surveys still indicate strong industrial activity in the beginning of 2016.
