Industrial Production

Previous-0.6%
Forecast-0.2%
Definition

It measures the change of output in the industrial sector of the Euro Zone, having in mind that this index is very significant since it helps to forecasts GDP changes knowing that the Industrial Production sector has a strong impact on the overall Union GDP. Still, this indicator rarely affects the market and is released by the Eurostat in a monthly base along with non-common revisions.

General Effect

The index of industrial production shows how much factories, mines and utilities are producing accounting for a slight percent of the GDP but is a representation of the levels of expansion in the economy, for it can be a comparative measure to weigh which is growing on a higher pace whether is capital goods or consumption assets. As it accounts for the heavy part of production in the economy, therefore it is watched regularly by various parties in hopes of determining how correlated industries in the economy will likely be performing in that given period in order to act accordingly. In addition to the preview to the production levels provide the capacity utilization levels provide a very clear indicator to inflation levels and threats that is why it is important for markets to notice for any future monetary policy action that might take place.

As this indicator is the measure of how strong, steady, and fast is the pace of growth growing, then a stronger higher reading is positively coherent with the currency as well as the stocks for the enhancement of corporate income, where the opposite is applicable in both scenarios as well. Worth mentioning a higher reading in the capacity utilization indicates that corporations are using their assets to the fullest as that provides a positive reflection on the stocks, for the level of productivity is improved when exploiting all available assets in that process and in its turn provides increased returns for the corporations.

Best Case ScenarioThe euro zone is scheduled to release its industrial production in which expectations show will rise and the best case scenario would be if the reading were to come in higher than projections because then this means higher domestic and aboard demand therefore helping economic growth.
Worst Case ScenarioThe worst case scenario would be if industrial production dipped as this will mean that demand is still weak while a weaker manufacturing sector therefore will hold back a full economic recovery in the nation despite the ECB measures of buying euro dominated bonds worth 60 billion.