Euro area industrial production outlook for August

A mixed set of national industrial production data for August from some European countries like France, Italy and the Netherlands suggested that while euro-zone industry might have fared slightly better in Q3 than it did in Q2, the sector is still struggling. 

For once, France outperformed as industrial production rose by 1.6% on the month, much stronger than the consensus forecast of a 0.6% increase and pushing the annual rate up to 1.6%. Output in the core manufacturing component rose by 2.2% m/m. 

"Unchanged output in September would leave production up by 0.3% on the quarter in Q3, better than Q2's 0.4% fall. But industrial surveys do not suggest that the sector is  likely to recover strongly in the coming months", says Capital Economics in a research note on Friday.

But the industrial data from Italy and the Netherlands for August were much less positive. The 0.5% m/m drop in Italian industrial production was worse than expected and reflected falls in energy, consumer goods and intermediate goods production while capital goods production stagnated. A rise of 0.3% would be needed in September if Italian industry is to match its Q2 performance in Q3, added Capital Economics.

Together with the very disappointing German and Spanish industrial production figures published earlier this week, today's data suggest that euro-zone industrial production may have fallen by around 0.4% in August. A flat reading in September would leave production unchanged on the quarter in Q3. While this is better than Q2's 0.2% fall, it hardly paints a picture of a robust industrial recovery.