EMU IP Continues to Grow Despite Monthly Setback

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.