What's going on?
The euro zone's industrial sector fell in April, but major investment banks still expect the region to end the year on a strong note.
What does this mean?
Economists had expected euro zone industrial production to rise just 0.2% in April, still too high a target. Instead, rejection It rose 0.1% in 2019, with March's figure revised down to a slight increase of 0.5%. However, the decline was mainly related to raw materials and the like, while production of “capital goods” including machinery and equipment seems to be moving in the right direction. And the biggest falls were in some of the eurozone's smaller economies, with Italy being the only country among the “big four” to fall.
Why should you care?
For markets: Talk about European politics.
The euro zone now must pin its hopes on the service sector, which is still suffering from high inflation. interest Prices and inflationTo make matters worse, Europe is in political turmoil, with warnings that the rise of right-wing governments could exacerbate fiscal instability in the region. Still, Citigroup analysts expect Europe's STOXX 600 index to rise 11% by the end of the year, and could reach even more if interest rates are cut.
Overall picture: The scissors are locked.
Economic updates are fluctuating so quickly that it's hard to get a sense of how the country is actually doing right now. One week the economy might look strong enough to risk sparking inflation. Another week it might be weakening. This week's numbers fell into the latter category. China and the UK both released data that suggests their economies are in decline. So remember to zoom out and look at the bigger picture. And be especially careful. When an economy is at a turning point, for better or worse, conflicting data often comes out.
