– Capacity utilisation dropped to 77.8 percent, from 78.3 percent in March
– Utilities down 3.7 percent, from an increase of 6.4 percent in March
– Motor vehicles and parts down 2.9 percent vs. an increase of 2.3 percent in March
Industrial production down 0.5 percent in April, weaker than expected
Industrial production declined 0.5 percent m-o-m in April, versus an increase of 0.3 percent (revised down from 0.4 percent) in March. Consensus expected a decline of 0.2 percent. Capacity utilisation dropped to 77.8 percent in April, from 78.3 percent (revised down from 78.5 percent) in March. This was lower than expectations of 78.3 percent. In the future, we believe industrial production, which is a leading indicator for business investment, will likely increase at a moderate pace. Economic drivers are export prospects for large corporations to emerging markets in particular, investment in shale gas production and residential construction, while headwinds stem from more fiscal tightening burdening industrial production.
Market and industry groups
Market groups: business supplies declined by 1.0 percent, construction supply by 0.8 percent, consumer goods by 0.6 percent, business equipment by 0.5 percent, and defense and space by 0.3 percent. Industry groups: utilities declined by 3.7 percent (electric down 3.5 percent and natural gas down 4.6 percent), motor vehicles and parts by 1.3 percent and machinery by 0.4 percent, while mining increased by 0.9 percent and computer and electronics by 0.2 percent.
Projection of industrial production
The graph below shows our projection of how industrial production will likely change, assuming it changes at the same pace as its averages for the past six months.
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