Eurozone industrial production rises further in October

Euro area industrial production (IP) rebounded by 0.6% m/m, broadly in line with consensus expectations. The reading is consistent with an annual growth rate of 1.9% y/y, up from 1.3% y/y. The earlier data were slightly revised, sending the Q3 growth rate to +0.2% q/q from +0.1% q/q previously.

Positively, euro area Industrial production growth was broad based in terms of sectors in October - barring a marginal decline in intermediate goods production. Capital goods and durable consumer goods production posted strong prints (+1.4 % m/m and 1.8% m/m, respectively), while manufacturing increased by 0.6% m/m after two months continues drop. Energy output was edged up by 0.6% m/m.

Overall, the Q4 carryover stands at +0.3% q/q, consistent with resilient business surveys and an ongoing moderate recovery (Q4 GDP forecast at +0.3% q/q).

In October, most of the euro zone countries posted a rebound in Industrial production, except Greece. The rebound was particularly better in Portugal and Ireland, while Netherlands IP posted stronger than expected print, after number of declines over the summer. Both France and Italy rose by 0.5% m/m, but drivers were very different. In France, the industrial output was strongly supported by a strong performance on the volatile component front while manufacturing output disappointed again.

In contrast, the positive surprise in Italian Industrial production was driven by a solid manufacturing print, against the backdrop of a disappointing GDP growth composition in Q3 and weakening prospects for non-EU exports.

"German Industrial production was muted at 0.1% m/m after a sharp contraction in September, indicating a significantly negative carryover (-0.9% q/q). However, latest factory orders, which surprised to the upside, and robust manufacturing business surveys signal that we could see some improvement in Q4 industrial activity", says Barclays.