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Economy in Brief

EMU IP Moves Higher
by Robert Brusca  July 12, 2017

Industrial production (headline excluding construction) is showing steady growth in the euro area. IP gained 1.3% in May after a 0.3% rise in April. Manufacturing IP rose by 1.3% after being flat in April. Both headline and manufacturing output gains are showing annualized growth rates ranging between 2.1% to 8.8% over three months and six months and 12 months. There is no steady acceleration in either of these two main IP groupings. Among the major category grouping, only the output of consumer durables is showing a steady increase in the speed of output from 12-month to six-month to three-month.

Moreover, in the quarter-to-date output is especially strong with very solid rates of growth in all sectors.

For the 11 countries of the EMU in the table, only Malta has a decline in manufacturing IP in May. Five countries showed declines in April and three showed declines in March. In general, output in the current month as well as in recent months is up on a broad basis even in terms of month-to-month changes.

Three-month changes in IP are lower in only two countries: Malta and Greece. Over six months, output is lower in Malta and Ireland. Over 12 months, output is lower only in Malta. In fact, in most countries, output is not just growing but growing at steady-to-fast rates of growth.

In the quarter-to-date, three of 11 countries show manufacturing IP is falling: Spain, Malta and Greece.

If we broaden this group to include the U.K., we pull in a country that is struggling now more than most of the EMU. U.K. output is lower in two of the last three months and is lower on balance over three months. The U.K. is trying to come to grips with its adjustment to moving outside of the EU area.

The overview finds that EMU area output and manufacturing output on solid ground. Output is also expanding well across the various sectors. One of the bright spots is the firm increase we are seeing in the output of capital goods. The European economy is looking very solid on the industrial side in the wake of this report.

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