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Industrial production increased in February by 0.4% m/m after falling by 0.6% the previous month. Even assuming a small decline in March, as suggested by survey data, industrial output should perform much better in Q1 2013 than in the last quarter of 2012. GDP contraction could have eased in Q1 2013.
Industrial production increased in February by 0.4% m/m after falling by 0.6% over the previous month. Output was up in all sectors, with the only exception of non-durable consumer and intermediate goods sectors. The country breakdown showed some divergence within the zone, with output rebounding in Germany and France, while heavily falling in Italy and Spain.
Survey data signal that output might slightly decline in March. The new-orders to inventories ratio, derived from the Manufacturing PMI survey, a good track of industrial output, eased in March. However, even assuming a small decline in March, industrial output should perform much better in Q1 2013 than in the last quarter of 2012, when it fell by over 2% on a quarterly basis. Industrial production figures combined with quarterly results of survey data suggest that the recession (GDP growth contracted by 0.6% q/q in Q4 2012 after falling by 0.2% q/q in Q3 2012) might have eased in the first quarter of the year.
The crisis is not over yet, and we do not expect a significant recovery going forward. Renewed tensions in financial markets tempered the optimism and the improvement in confidence indicators which have been building since last summer. Credit is still contracting, and financial markets are still highly segmented. Domestic demand will continue to suffer from rising unemployment (at 12% in February, the unemployment rate reached its highest level since the launch of the euro) and from the ongoing deleveraging process in the private sector. Against a backdrop of falling inflation and weak economy, the ECB signaled that it might cuts rates as soon as next month, and take further measures to stimulate lending.
Further ahead, recovery should gain some momentum, benefiting from an accommodating monetary policy and the improvement in financial conditions as they gradually filter down into the real economy as well as a more favourable external environment.
BY Clemente DE LUCIA
To Read the Entire Report Please Click on the pdf File Below.
Industrial production increased in February by 0.4% m/m after falling by 0.6% over the previous month. Output was up in all sectors, with the only exception of non-durable consumer and intermediate goods sectors. The country breakdown showed some divergence within the zone, with output rebounding in Germany and France, while heavily falling in Italy and Spain.
Survey data signal that output might slightly decline in March. The new-orders to inventories ratio, derived from the Manufacturing PMI survey, a good track of industrial output, eased in March. However, even assuming a small decline in March, industrial output should perform much better in Q1 2013 than in the last quarter of 2012, when it fell by over 2% on a quarterly basis. Industrial production figures combined with quarterly results of survey data suggest that the recession (GDP growth contracted by 0.6% q/q in Q4 2012 after falling by 0.2% q/q in Q3 2012) might have eased in the first quarter of the year.
The crisis is not over yet, and we do not expect a significant recovery going forward. Renewed tensions in financial markets tempered the optimism and the improvement in confidence indicators which have been building since last summer. Credit is still contracting, and financial markets are still highly segmented. Domestic demand will continue to suffer from rising unemployment (at 12% in February, the unemployment rate reached its highest level since the launch of the euro) and from the ongoing deleveraging process in the private sector. Against a backdrop of falling inflation and weak economy, the ECB signaled that it might cuts rates as soon as next month, and take further measures to stimulate lending.
Further ahead, recovery should gain some momentum, benefiting from an accommodating monetary policy and the improvement in financial conditions as they gradually filter down into the real economy as well as a more favourable external environment.
BY Clemente DE LUCIA
To Read the Entire Report Please Click on the pdf File Below.