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Economy in Brief

EMU IP Continues to Grow Despite Monthly Setback
by Robert Brusca  August 14, 2017

Euro area industrial production fell in June, marking its first decline since February. Output fell by 0.6%, unwinding about half of its May gain of 1.2%. There were monthly declines in a three major sectors as well as in both consumer subsectors.

Sequential growth rates from 12-month to six-month to three-month show a slight acceleration for headline IP as growth steps up from 2.7% to 2.9% to 4.2% respectively. Manufacturing IP is slightly weaker than the headline over 12 months with growth at 2.3% and it is not accelerating as is overall IP (excluding construction).

Consumer goods output is leading the advance in output over three months with a 3.9% gain compared to 1.5% for intermediate goods and a decline at a 3.4% pace for capital goods. Over 12 months, however, the consumer goods sector lags, intermediate goods lead, and capital goods output gains at a 1.5% pace.

However, the over pace of IP growth does not appear to be a slowdown in place as the quarter to date figures (for the just completed second quarter) show a solid and strong headline advance at a 4.9% pace with manufacturing up at a 5.1% pace and solid output gains across all sectors.

Output appears to be on a steady track with a minor setback this month. The country level data for the EMU also show somewhat widespread declines in June after seeing a solid slate of advances in May. June appears to be a month in which output has slowed to reduce the overall pace of growth to something that is more sustainable rather than signaling a slowdown of any sort.

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