Manufacturing production dropped by a full 1.7% on the month in October, far below forecasts. Production was a full 5% lower than a year ago. Moreover, order intake fell as well, indicating weak developments also in the coming months.
The main drawback is the industry for electronics, which fell by a full 17% m/m. Also the important machinery industry dropped by almost 3%, while production of motor vehicles as well as production of food rose by 4% and 2%, respectively. Thus, the picture is somewhat mixed. Nevertheless, the weak figures for October raise question marks on the underlying trend for the manufacturing industry.
There are some temporary factors at play, not least a planned production stop at the petroleum industry. However, these factors don’t explain the drop in October m/m.
All in all, today’s figures point to downside risks to our Q4 GDP forecast at 0.7% q/q. It also increases the probability for a rate cut at next week’s monetary policy meeting.
Details, October
Production y/y: -5.0% (Nordea -0.9%; consensus -1.0%; prior unrevised at -0.9%)
Production m/m: -1.7% (Nordea 1.0%; consensus 0.9%; prior unrevised at 0.0%)
Order intake y/y: -6.6% (prior -2.3, revised from at -2.9)
Order intake m/m: -2.5% (prior -2.8, revised from -2.9%)
Nordea