Industrial output fell by more than expected in November, recording a second consecutive monthly fall. Industrial production decreased by 0.6% m/m compared with a downwardly revised -1.0% in November (consensus: -0.1%, BarCap: -0.3%).

Manufacturing production was in line with our and the consensus expectations, falling by 0.2%, while the previous month's figure was revised down to -0.9%.

The non-manufacturing sector was also weak in November. Mining and quarrying output fell by 2.2% m/m, with falling oil and gas extraction driving this decrease. Energy supply also declined by 2.2%, mainly as a result of lower demand for gas used in electricity production. November's unusually warmer weather appears to have had a significant negative effect on energy demand.

 
With November seeing another monthly fall in industrial production, the data so far indicate that the sector is set for a very poor performance in Q4 - a view supported by survey indicators (see chart). Currently, we expect industrial production to have fallen by 0.6% q/q in Q4 but today's data suggest the drop could be larger. Indeed, taken on their own, today's data imply GDP might have contracted by 0.1% q/q in Q4 as opposed to our current forecast of zero growth. When the construction output data for November are released (tomorrow), we will revisit our Q4 GDP forecast.


source: BarCap