Industrial Output Down In May

Following April marked increase (+2% m/m) industrial output corrected downward in May, down 1% m/m. In particular, output in construction declined 2.3% after jumping +8.3 % in April in line with the end of the cold winter. Recent surveys point to on-going recovery in the industry sector.

Après la forte hausse d’avril (+2% m/m) la production industrielle a corrigé à la baisse en mai, reculant de 1%. En particulier la production dans la construction a baissé de 2,3% après la forte hausse d’avril (+8,3%) suivant la fin de l’hiver. Les enquêtes récentes indiquent une poursuite de la reprise dans le secteur industriel.

In May, industrial production decreased, down by 1% m/m. This fall was expected, as industrial output increased 2% the previous month, recording the sharpest rise since March 2012. On a year-on-year basis, it was down 1.1%, back into negative territory. Industrial output underlying trend accelerated from 1.5% to 2.2% 3mth/ 3mth in May.

Construction output decreased in May, down 2.6% m/m. This fall was expected, as output in the sector jumped markedly in April in line with the end of the cold weather (+8.3% m/m). Manufacturing output also decreased, down 0.7%. Amongst manufacturing branches, capital goods output which accounts for a third of industrial output was down 2.3% following a 3.9% rise in April. In the consumer goods sector, production was roughly unchanged, down 0.1%.

Recent surveys give encouraging signals regarding activity, as they are all orientated upwards. The IFO index was modestly up from 105.7 in May to 105.9, while the ZEW expectations index increased from 36.4 to 38.5. According to ESI release, Germany's sentiment indicator increased from 98.7 to 99.8. Finally, the manufacturing PMI output index (at 50.5) remained above the 50-threshold in June for the second month in a row, though falling somewhat from May.

Industrial output should recover progressively as the euro area exits from current recession. In June, nonetheless the floods have weighed on German output, and particularly on construction. Conversely in the coming months, positive catch-up effects will boost output in Q3 in line with rebuilding efforts.

BY Caroline NEWHOUSE

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