April preliminary: +0.2% m/m, +5.2% y/y

MNI survey median: -0.2% m/m, +5.0% y/y
MNI survey range: -0.5% to +0.6% m/m

March: flat m/m (revised from -0.2%)
February: +0.6% m/m (unrevised)
January: +0.2% m/m (revised from flat)
December: +0.2% m/m (unrevised)
November: +1.4% m/m (revised from +1.5%)
—

FRANKFURT (MNI) – Industrial production in the Eurozone picked up
slightly in April, despite a sharp fall in energy output, lifting
overall output to its highest level since October 2008, Eurostat
reported on Wednesday.

Taking March’s upward revision into account, April’s 0.2% increase
resulted in an annual increase of 5.2% after +5.8% in March. Analysts
were split in their forecasts, expecting on balance a decline on the
month.

Energy production fell by 3.7% between March and April, widening
the yearly decline to 4.2% — a 17-month record.

After stalling in March, intermediate goods output rose 0.1% on the
month and was up 5.7% on the year. Capital goods output also recovered,
rising 0.5% on the month and 9.7% on the year.

Nevertheless, both components have been slowing recently, adding to
signals that the industry upswing is losing momentum.

Consumer durables rose 1.3% on the month, doubling the pace of
annual growth to +5.2%. Non-durable goods production was unchanged on
the month to give an annual gain of 3.1%.

In addition to sluggish capital and intermediate goods growth, soft
leading indicators point to a slowdown in output in the near term. The
May factory PMI fell to a seven-month low on weaker growth in output and
new orders.

The further fall in the National Bank of Belgium’s business climate
indicator in May supports this assessment, as does the eight-month low
in the European Commission’s industrial production outlook index.

In Germany, production fell 0.3% on the month due to weakness in
consumer goods, capital goods and especially construction output,
narrowing the annual increase to 9.9%.

However, new orders for German manufacturers rebounded
significantly in April, while production expectations recovered in May,
partially retracing two months of declines, an Ifo survey showed.

French industry output also fell 0.3% between March and April,
cutting the annual gain to 2.9%. Despite March’s dip, demand for French
industrial goods was up 2.4% on the quarter.

Order book levels remained above average in both April and May, the
Bank of France noted, adding that production saw a modest increase.
However, companies cited in the central bank’s latest sentiment survey
projected a slight decline in activity in the near term.

In Italy, production rose 1.0%, its third consecutive monthly rise,
resulting in an annual increase of 3.7%.

The Italian factory PMI hit a six-month low in May, due to slower
growth in output and new orders. While the sector remains in
“expansionary mode”, it faces “a number of headwinds,” the PMI report
warned.

Spanish industry contracted 0.1% on the month and 1.6% on the year
in April.

Shrinking production and new orders levels cut the Spanish factory
PMI to below 50 in May, offsetting further growth in foreign demand,
said Markit Economics, the firm that produces the PMI report.

“Deteriorating conditions in the manufacturing sector are a
worrying sign for the economy as a whole, because the sector had been
the main driver of growth in recent months,” said Andrew Harker,
economist for Markit Economics, the firm that produces the PMI reports.

Among the other Eurozone states, the strongest monthly jumps were
seen in Malta, at +2.2%, Luxembourg and Slovakia, both at 1.6%, and
Ireland, at +1.3%.

On the other side of the spectrum, Portugal led the way lower, with
production falling 3.6% on the month, followed by Greece at -3.5% and
Slovenia at -3.1%.

— Frankfurt bureau: +49 69 720 142; e-mail: frankfurt@marketnews.com —

[TOPICS: M$XDS$,MT$$$$,M$X$$$]