Weak euro area industrial production for February leaves economists divided

Kristopher Drake
April 13, 2017

Eurostat, the official statistics agency, said Tuesday that industrial output for the month of February fell 0.3% from January, but held a 1.2% gain when compared to the same period a year ago.

Industrial production fell to a four-month low in February as manufacturing sector lagged behind, while retail inflation hit a five-month high in March though food prices cooled down. Capital goods production, which denotes investment, however contracted by 3.4 per cent in February (10.93 per cent growth in January) and intermediate goods also contracted by 0.2 per cent (1.96 per cent contraction in January).

The cumulative IIP growth for the period April-February period of the current financial year over the corresponding period of the previous year stood at 0.4 percent, as per the data released by Central Statistics Office Friday.

The mining output rose by 3.3 per cent and that for electricity generation inched up by 0.3 per cent.

The non-durable consumer goods output shrank by 8.6 per cent in February over a contraction of 4.9 per cent year ago.

"It only indicates that the growth remains fragile in manufacturing and we need continued efforts to make the sector competitive". At the same time retail inflation jumped to 3.81 per cent in March against 3.65 per cent in February driven by higher inflation in fuel, housing and clothing.

Consumer food price inflation however, eased to 1.93 per cent in March as compared to 2.01 per cent in February. The sector had recorded a meagre growth of 0.6 percent in February, 2016.

With analysts expecting a further rise in inflation in coming months, most are ruling out a cut in interest rates. As per inflation data, protein rich items such as milk and products and eggs were costlier during the month with inflation prints of 4.69 per cent and 3.21 per cent, respectively.

In the EU28, industrial production edged down 0.2 percent monthly in February, while it grew 2.1 percent from a year ago.

Prepared meals, snacks and candies prices were also high as prices grew by 6.13 percent. However, vegetables inflation contracted by 7.24 per cent in March 2017.

The rate of price rise in fuel and light was at 5.56 per cent.

"Our internal estimate suggests that CPI inflation is unlikely to breach the 4 per cent mark till July 2017".

Other reports by Ligue1talk

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