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From Nomura, the latest industrial production numbers from French and Italy:French industrial production (IP) declined by 1.7% m-o-m in September after increasing by 0.5% in August. This reading is well below expectations (Consensus: -0.7%; Nomura: -0.6%). However, looking through the monthly volatility, industrial output is still up by 0.8% q-o-q in Q3, much stronger than the 0.5% decline in Q2. This, together with the slight rebound of household consumption of manufacturing goods (increasing by 0.2% in Q3 after declining by 1.9% in Q2), offsets some of the negative effects from the weak survey data. We therefore maintain our Q3 GDP forecast at 0.2% q-o-q for France, which will be released on next Tuesday.
In Italy, industrial production fell by 4.8% m-o-m in September and fully reversed the 3.9% increase in August (revised down from +4.3%). The decline was far greater than expected (Consensus: -3.0%; Nomura: -3.5%) and led to Q3 industrial production declining by 0.1% (+1.1% in Q2). As a result, we have revised down Italian Q3 GDP forecast from +0.1% q-o-q to -0.1% q-o-q.
It’s getting harder and harder to see how Europe isn’t already in a recession. Everywhere you look you see sharply negative numbers.