In April, euro area industrial activity is expected to have decreased by 0.2% mom, following the larger-than-expected drop of 0.3% mom posted in March. Exports orders have been disappointing as the positive impact of a weak currency does not offset the negative impact from the downturn in global trade.
Looking at the regional breakdown, Irish industrial output has been quite volatile over the past few months, contributing strongly to euro area industrial production growth.
Societe Generale notes:
- In April, we expect it to decrease significantly by 11.3% mom, after the dramatic surge recorded over the last two months. This projection, if it materializes, would be the main drag on the euro area industrial output growth in April. This kind of weakness should not last, however.
- First, we expect exports to start responding to the euro's weakness in H2 15, although the contribution of net exports to GDP growth looks set to remain muted compared to past recoveries.
- Secondly, domestic demand will continue gaining traction, with higher production of consumer and capital goods, helped by the various exogenous factors affecting the region (commodity prices, low interest rates).
