Eurozone industrial production falls more than expected. Industrial production across the eurozone fell more than most economists anticipated in July, signalling that the economies that share the euro currency are facing a slowdown, a report by statistics agency Eurostat showed on Wednesday. The eurozone’s industrial output fell 1.1 percent in July compared with June, the report showed, versus expectations of a drop of 0.7 percent and an increase of 0.4 percent in June. On an annual basis production fell by 2.2 percent in July, compared with a 1.1 percent decrease in June and expectations of a 0.3 percent drop. Bradley Saunders, an economist at Capital Economics, expects industrial production to continue to trend downwards for the remainder of the year, given the weakening demand. He said weak industrial production will help to push the eurozone’s economy into a recession later this year.
UK economy shrinks in July amid adverse weather and strikes. The UK economy experienced an unexpectedly sharp contraction in July in the wake of strikes in hospitals and schools as well as unusually wet weather, according to figures released by the Office for National Statistics (ONS) on Wednesday. Gross domestic product (GDP) in the British Isles declined by 0.5 per cent in July from June adding to fears of a recession in the second half of the year. Analysts had expected the economy to shrink by 0.2 per cent, but the ONS said that strikes by junior doctors reduced health service activity, while the warm weather that boosted shopping in June was not as favourable in July, which was the sixth wettest month on record. "Our initial estimate for July shows that GDP fell; however, the broader picture looks more positive, with the economy growing across the services, production and construction sectors in the last three months”, Darren Morgan, ONS director of economic statistics, said.
US August consumer prices increase in line with estimates. A highly anticipated report by the US Labour Department released on Wednesday showed that consumer prices in the US rose in line with economist estimates in August. The Consumer Price Index (CPI), which measures price changes at retail level across a broad basket of goods and services, rose a seasonally-adjusted 0.6 per cent for the month, and was up 3.7 per cent from August of last year. Economists had forecast respective increases of 0.6 per cent and 3.6 per cent. However, core CPI, which excludes volatile food and energy items, increased by 0.3 per cent and 4.3 per cent respectively, comparted to forecasts of 0.2 per cent and 4.3 per cent. When setting interest rates, the US central bank gives more importance to the core rate, as it provides a better indication of where inflation is heading over the long term. Even with the decline in the core rate in recent months, inflation still remains far above the bank’s target rate of two per cent.
India’s industrial output rises as inflation cools. India's industrial output rose at its fastest rate in five months in July, underpinned by strong activity in the mining and electricity sectors. The Index of Industrial Production (IIP) grew by 5.7 per cent in July year-on-year compared with a revised 3.8 per cent in June, official data published on Tuesday showed. Economists had forecast the IIP to growth at a 5.3 per cent pace. On a month-on-month basis, the index fell by one per cent. A separate report showed that the CPI moderated to 6.83 per cent in August from a 15-month high of 7.44 per cent in July, after vegetable prices fell, offering a breather to the Reserve Bank of India (RBI) and bond investors even though it remained above the Indian central bank's target range of two to six per cent.
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