Euro-Area Industrial Production Rises in August

• Euro-Area Industrial Production Rises in August

Euro-area industrial production rose to the highest in nine months in August following the surge in demand for capital goods.

According to Eurostat, industrial production increased by 1.4 percent in August and 3.8 percent from a year ago. The highest increase since November 2016.

While, this is better than the 0.5 percent and 2.6 percent year-on-year growth predicted by economists. It also revealed growing demand for capital goods and indicates continuous job creation.

July data was revised up from 0.1 percent to 0.3 percent and to 3.6 percent year-on-year from 3.2 percent previously estimated. Meaning industrial production is growing at a faster pace than initially thought.

Similarly, capital goods production rose to 3.1 percent in the month, while production of durable consumer goods increased by 1.3 percent.

Rising business confidence and growing economy continued to bolster new investment in the region.

The Euro-area economy remained vibrant even with the growing Catalonia unrest and the Brexit conundrum. The economy expanded faster in the second quarter with the manufacturing sector rising to the highest in almost 7 years in September and the inflation rate gradually picking up.

“The stronger euro has so far barely dented export growth and domestic demand conditions were generally seen to have improved,” said Chris Williamson, chief economist at IHS Markit. “With the upturn being accompanied by rising inflationary pressures, expectations of an imminent announcement from the ECB in relation to tapering of policy stimulus will intensify.”

However, weak wage growth remains a concern even though more jobs are been added to the economy, consumer prices are still below the European Central Bank’s 2 percent target. These are some of the reasons the apex bank is yet to announce the commencement of its balance sheet normalization like the U.S. Federal Reserve. But strong incoming data may force the central bank to do so soon.

The Euro currency remains stable against counterparts.