Daily Insight
Group Economics Macro & Financial Markets Research
15 March 2016
Eurozone industry surges…but no cigar
Aline Schuiling Senior Economist Tel: +31 20 343 5606 aline.schuiling@nl.abnamro.com
Eurozone industrial production jumped higher in January …
… but we still expect only weak economic growth in coming months
Business surveys deteriorated in January and February…
…while global growth is anaemic and the euro has strengthened
Eurozone industrial production starts the year at a strong note … Industrial production in the eurozone jumped by 2.1% mom in January following two monthly contractions in a row during the final months of last year. The yoy growth rate increased from -0.1% in December to 2.8% in January. The rise in January was well above the consensus forecast. Despite the jump in industrial production, we expect the eurozone economy to expand at a slower pace in the first half of this year than in the second half of last year.
Eurozone, industrial production and PMI % yoy
level
9
65
6
60
3
55
0
50
-3
45 40
-6 11
12
13
Industrial production (lhs)
14
15
16
Manufacturing PMI (rhs)
Source: Thomson Reuters Datastream, ABN AMRO Group Economics
Pay-back expected in the next few months The industrial sector’s strong start to the year will probably be followed by payback in the next few months. In the first place, business surveys, such as the manufacturing PMI and Germany’s Ifo indicator, have deteriorated noticeably in January and February. Moreover, the details of January’s production report show that the sharpest rises were in the production of capital goods (+ 3.9% mom) and energy (+ 2.4%). These are the most volatile parts of production and sharp rises in activity in these sectors tend to be followed by declines in the coming months. Finally, the outlook for eurozone exports and industrial production has deteriorated in recent months due to the slowdown in the global economy and global trade, as
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Daily Insight – Eurozone industry surges‌but no cigar - 15 March 2016
well as the appreciation of the trade-weighted euro exchange rate (by around 4% since the start of December). Final domestic demand resilient, but to weaken somewhat as well Private consumption was the main driver of eurozone economic growth in 2015, but the quarterly growth rate slowed down in Q4 (to 0.2% qoq from 0.5% in Q3). Both retail sales and car sales were strong in January and indicate that consumption picked up somewhat again in Q1. Still, the drop in consumer confidence in January and February suggests that consumption growth will not return to the level of 2015Q3. Particularly, because the expectations about the labour market declined in January-February, while the intention to purchase big-ticket items weakened. Finally, fixed investment growth (+1.3% qoq in 2015 Q4) should be sluggish as well in the first half of this year. Worries about the strength of the global economy and rising political uncertainties in various European countries will probably weigh on fixed capital formation.
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Daily Insight – Eurozone industry surges…but no cigar - 15 March 2016
Day
Date
Time
Country
Saturday Saturday Saturday Saturday Saturday Saturday
12/03/2016 12/03/2016 12/03/2016 12/03/2016 12/03/2016 12/03/2016
15/03/2016 15/03/2016 15/03/2016 06:30:00 06:30:00 06:30:00
CN CN CN CN CN CN
Monday Monday Monday
14/03/2016 14/03/2016 14/03/2016
07:30:00 11:00:00 13:00:00
Tuesday Tuesday Tuesday Tuesday
15/03/2016 15/03/2016 15/03/2016 15/03/2016
13:30:00 13:30:00
Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday
16/03/2016 16/03/2016 16/03/2016 16/03/2016 16/03/2016 16/03/2016 16/03/2016 16/03/2016
Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday Friday Friday Friday Friday
Period
Latest outcome
Consensus
M2 money growth - % yoy New loans - CNY bn Aggregate financing - CNY bn Retail sales - ytd yoy Industrial production - ytd yoy Fixed asset investment - ytd yoy
Feb Feb Feb Feb Feb Feb
13.3 727 780 10.2 5.4 10.2
13.7 1200 1841 10.7 5.6 9.3
IN EC IN
Wholesale price index - % yoy Industrial production SA mom CPI - % yoy
Feb Jan Feb
-0.9 2.1 5.2
-0.2 -1.0 5.5
US US US JP
Retail sales - % mom Prod. prices index excl food and energy - % mom NAHB home builders' confidence index Policy rate - %
Feb Feb Mar Mar 15
0.2 0.4 58 80.0
0.0 0.1 59 81.5
0.0
13:30:00 13:30:00 13:30:00 13:30:00 13:30:00 14:15:00 19:00:00 19:00:00
US US US US US US US US
CPI Inflation - % mom CPI Inflation - % yoy CPI excl food and energy - % mom CPI excl food and energy - % yoy Housing starts - % mom Industrial production - % mom FOMC rate decision lower bound FOMC rate decision upper bound
Feb Feb Feb Feb Feb Feb Mar 16 Mar 16
0.0 1.4 0.3 2.2 -3.8 0.9 0.25 0.50
-0.2 0.9 0.1 2.2 3.2 -0.1 0.25 0.51
-0.2 0.9 0.2 2.2 3.0
17/03/2016 17/03/2016 17/03/2016 17/03/2016 17/03/2016 17/03/2016 17/03/2016 17/03/2016 17/03/2016
00:50:00 07:30:00 09:30:00 09:30:00 09:30:00 10:00:00 11:00:00 13:00:00 13:00:00
JP NL CH CH CH NO EC GB GB
Merchandise trade exports - % yoy Unemployment rate SNB 3-month Libor Upper Target SNB 3-month Libor Lower Target SNB Sight Deposit Interest Rate Policy rate - % CPI Core yoy Policy rate - % BoE size of asset purchase programme - GBP bn
Feb Feb Mar 17 Mar 17 Mar 17 Mar 17 Feb F Mar 17 Mar
-12.9 6.5 -0.25 -1.25 -0.75 0.75 0.7 0.5 375.0
-3.8
18/03/2016 18/03/2016 18/03/2016 18/03/2016
06:30:00 11:30:00
NL RU US MX
Consumer confidence - index Key rate % Univ. of Michigan cons. confidence - index Policy rate - %
Mar Mar 18 Mar P Mar 18
-1 11.0 91.7 3.75
20:00:00
Key Economic Indicators and Events
ABN AMRO
1.2
59
0.25 0.50
-0.25 -1.25 -0.75 0.50 0.7 0.5 375.0
6.5 -0.25 -1.25 -0.75 0.50 0.7 0.5 375.0
11.0 92.3
1 11.0 91.0
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)
Find out more about Group Economics at: https://insights.abnamro.nl/en/
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