(Economist Intelligence Unit) — In April working-day-adjusted industrial output rose by 1.9% year on year-its strongest rate of growth for five months. However, in seasonally and working-day-adjusted terms, output fell by 3.3% compared with the previous month.
In year-on-year terms, output fell in January and February, but returned to positive territory in March and April. Following the April data, average output growth for the year to date was flat. Output growth in April relied heavily on a surge in production of capital goods, which increased by 17.8% year on year, after declines in the previous two months. Consumer durables and non-durables also posted positive growth, of 3.8% and 2.8% respectively, and production of intermediate goods rose by 1.9%. Only energy output declined, dropping by 0.8% compared with a year earlier.
Monthly industrial production data can be volatile and are often revised. Using a three-month moving average to strip out volatility, output rose by 0.4% year on year in April-an improvement on the negative readings on this basis recorded in the previous two months. Growth on a three-month moving average basis recently was driven primarily by consumer durables and capital goods, production of which rose by 3.2% and 3.6% respectively in April. Higher production of bigger-ticket consumer items and industrial investment goods suggests a decent level of sentiment among households and firms, in line with wider trends in the economy (real GDP rose by 0.8% quarter on quarter in January-March).
The external outlook has become more clouded since the beginning of the year, as reflected in falling indicators of sentiment and hard data across much of the euro zone, including in Germany. The relatively closed nature of the Greek economy will shield it partly from any further downturn the regional and global economies, but it is unlikely to be entirely immune. However, the most recent IHS Markit manufacturing purchasing managers’ index (PMI) for Greece, released at the start of June, suggests few reasons to worry-at least for now. Output, new orders and employment in industry all increased in May, with the headline indicator rising to 54.2, from 52.9 in the previous month (anything over 50 indicates expansion).
Source: Bloomberg
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