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Surprise Eurozone industrial production results in mixed outlook - ING

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 14, 2015.

  1. FXStreet_Team

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    FXStreet (Delhi) – Bert Colijn, Research Analyst at ING, notes that the industrial production in the Eurozone grew by 0.6 percent in October, which is a strong start to the fourth quarter after a weak third quarter.

    Key Quotes

    “Growth was driven by a recovery in production of durable goods, which grew by 1.8 percent after a strong contraction in September, and capital goods, which grew by 1.4 percent. Only intermediate goods saw a small decline in production of 0.1 percent, making it a broad-based increase in production after two months of declines.”

    “Growth was driven by recovery in France and Italy, where growth surprised. French production improved mainly because mining output rose by more than 5 percent. Manufacturing output declined, revealing continuing underlying weakness in the French industrial sector.”

    “German production disappointed as the 0.1 percent bounce back in October was far smaller than expected after the large drop of 1 percent in September according to Eurostat data. This further raises concerns about the impact of the slowdown in emerging markets and China in particular on the European industry.”

    “Even though today’s number surprises on the upside, the outlook for the industrial sector remains mixed. The PMI for manufacturing has been very strong recently with both production and new orders. The question is what we have to make of that as the PMI has been signaling strong output growth in the manufacturing sector for months in a row, but even with the growth in October industrial production is still below its February peak.”

    “New orders for manufacturing goods in the Eurozone as measured by the ECB, a leading indicator for industrial production, has plummeted by 5.5 percent in the past three months and is now back at levels last seen more than a year ago. This could indicate that the outlook for Eurozone industry in the winter months could remain weak, especially if emerging markets weaken further.”
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