EMU IP Recovers Sharply in August

Euro-area industrial production advanced sharply in August, rising by 1.1% reversing a drop of 1% in July. Still, in the quarter to date EMU IP is rising at a 0.4% annual rate and much faster over the last three months. Over three months EMU IP growth is at a pace of 4.6%, up from 3% over six months and -1.4% over 12 months.

Output by sector is generally accelerating with growth over three months greater than over six months and that stronger than growth over 12 months. These are classical acceleration dynamics. Still over 12 months all EMU-wide sector growth rates are negative. Over six months overall EMU IP growth is 3% compared to 4.6% over three months. Consumer goods output and capital gods output are the strongest. Consumer durable goods output shows strong recent acceleration. Capital goods output has been consistently the strongest or near strongest over the last three and six months.

The simple average growth of the various EMU members shows a growth rate similar to that of EMU as a whole (a weighted average growth rate) except of the past year. Over 12 months EMU-wide growth is at -1.4% compared to the -3.6% of the unweighted average. The much weaker pace of the unweighted average indicates how much weaker growth has been in the smaller EMU economies.

On balance, however, the sharp rebound in consumer and capital goods sectors is encouraging. France, Italy. The Netherlands and Spain still post negative growth rates over 3 months. Six months and 12 months (except Spain; it has a positive growth rate over six months). EMU is still digging out of trouble and some countries are still lagging. However, overall, it seems to be making progress according to the performance of its industrial sector.