August preliminary: +1.2% m/m, +5.3% y/y

MNI survey median: -0.7% m/m, +2.1% y/y
MNI survey range: -1.1% to +0.3% m/m

July: +1.1% m/m (revised from +1.0%)
June: -0.6% m/m (revised from -0.8%)
May: +0.2% m/m (unrevised)
April: +0.4% m/m (revised from +0.2%)
March: flat m/m (revised from -0.1%)
—

FRANKFURT (MNI) – Eurozone industrial output surprised to the
upside in August, while previous results were revised upwards for four
of the past five months, Eurostat reported on Wednesday.

Taking the previous revisions into account, August’s 1.2% monthly
increase brought output to its highest level since October 2008 and 5.3%
higher on the year.

Capital goods production growth slowed, but, at +2.1%, led the way
in monthly gains. Over the same period, intermediate goods output picked
up speed to +1.7%, while consumer non-durables rebounded 1.1%. Both
consumer durables and energy goods output were unchanged on the month.

On an annual basis, intermediate goods were up 5.3%, while capital
goods output jumped 12.2%. Consumer durables increased 2.8%, eclipsing
non-durables’ 1.9% rise. The annual shortfall in energy production
narrowed to 3.5%.

Eurozone manufacturers cited in Markit Economics’ September PMI
reported “the worst business conditions for over two years”, as both
output and new orders fell due to weakening domestic and foreign demand,
knocking the overall PMI figure (48.5) to its lowest level since August
2009.

“Output fell only modestly in September, but a faster rate of
decline in new orders suggests that the number of manufacturers cutting
production is likely to increase as we move into the fourth quarter,”
Markit Chief Economist Chris Williamson said.

Echoing the PMI report, a recent European Commission survey showed
that production expectations in industry fell to its worst level since
late 2009, as order books were assessed downwards and stocks increased
in September.

Among the larger Eurozone states, the strongest rise was noted in
Italy, where output rebounded 4.3% on the month to its highest level
since November 2008 and 4.7% higher on the year.

While new orders recovered in July, they were still 3% below 2Q’s
level, suggesting that August’s boost may not be long lasting.

The Commission industry morale indicator showed a further decline
in Italian sentiment, as the majority of respondents expected
productions to worsen in the near term.

Spanish production was also in the black, rising 1.3% m/m after two
previous declines, lifting the annual change to +0.3%.

However, like in Italy, the good news in Spain might not last long.

The latest PMI showed contractions in both output and new orders in
September, bringing the overall indicator to 43.7 and signalling “the
sharpest deterioration in business condition in the sector since June
2009

In France, production rose 0.6% to a 34-month high on the back of
stronger refinery output and electric machinery production, boosting the
annual change to +5.1%.

Recent indicators suggest that the increase is unlikely to develop
into a trend, including the latest PMI, which highlighted falling new
orders, and INSEE’s industry climate index, which indicated a notable
downward revision to manufactures’ short term outlook.

German industrial output fell 1.0% on the month, narrowing the
annual gain to 7.8%. According to national data, the weakness was
broadbased, with only capital goods showing further — albeit modest —
growth.

Manufacturers cited in the latest Ifo survey remained generally as
optimistic about the current period. However, their view of the coming
six months dipped sharply, reaching their most pessimistic level in over
two years.

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

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