14 Jul 2014
Sharp drop in EMU May IP doesn't bode well for the sector’s performance in Q2 - ING
Martin van Vliet from ING comments on the considerable decline in Eurozone Industrial Production numbers for May, suggesting that it highlights the lacklustre and bumpy nature of the Eurozone recovery.
Key quotes
"Industrial output in the 18-country region fell by 1.1% MoM, more than reversing the revised 0.7% increase seen in April."
"If industrial production were to remain unchanged in June, it would have contracted by -0.3% QoQ in Q2. However, there are two reasons why we think output will bounce back sharply in June."
"First, May’s decline in output may have been exacerbated by the timing of public holidays, as this may have prompted people to take extra days off work (which is not adequately captured in the seasonal and working day adjustment). "
"Second, the recent weakness in industrial output is more pronounced than suggested by the PMI manufacturing survey."
"We would need to see further PMI weakness before we become concerned about a stalling industrial (and wider) recovery."
"That being said, with industrial output still more than 12% below its pre-crisis peak, there remains a long way to go before the slack in the industrial sector is fully eroded."
Key quotes
"Industrial output in the 18-country region fell by 1.1% MoM, more than reversing the revised 0.7% increase seen in April."
"If industrial production were to remain unchanged in June, it would have contracted by -0.3% QoQ in Q2. However, there are two reasons why we think output will bounce back sharply in June."
"First, May’s decline in output may have been exacerbated by the timing of public holidays, as this may have prompted people to take extra days off work (which is not adequately captured in the seasonal and working day adjustment). "
"Second, the recent weakness in industrial output is more pronounced than suggested by the PMI manufacturing survey."
"We would need to see further PMI weakness before we become concerned about a stalling industrial (and wider) recovery."
"That being said, with industrial output still more than 12% below its pre-crisis peak, there remains a long way to go before the slack in the industrial sector is fully eroded."