Eurozone industrial production rises more than expected in August

Eurozone industrial production rose more than expected in August, according to figures released on Wednesday by Eurostat.

Industrial output grew 1.5% on the month following a 2.3% decline in July, coming in ahead of consensus expectations for a 0.6% increase.

The production of capital goods rose by 2.8%, durable consumer goods by 0.9% and non-durable consumer goods by 0.7%. The production of intermediate goods and energy fell 0.5% and 2.1%, respectively.

On the year, industrial production was up 2.5% in the bloc following a 2.5% drop in July, beating expectations for a 1.2% rise.

ING said: "Industrial production is generally volatile from month to month and therefore we do not think this is to be taken as the start of a recovery. All survey data and anecdotal evidence point toward a more significant slump ahead as demand is weakening and high energy costs are forcing businesses to slow production or stop it altogether in certain energy-intensive sectors. The upside risk to that view comes from improving supply chains, which could unlock some backlogs of production. Still, our base case is for the manufacturing sector to contract in the months ahead.

"Overall, while the outlook for production is weakening, this data in itself is no reason for the ECB to change tack in terms of its rate hike strategy. For a dovish pivot, the ECB would need to see evidence that the economy is contracting quickly. While a quarterly contraction in manufacturing is definitely a possibility, these August data are far from alarming. A 75bp hike in October is therefore very much on the table at the moment."