You may have missed it, but there was a bunch of bad economic data released overnight.
Most concerning may have been Italian industrial production data, which fell a seasonally adjusted 9.2 per cent year-over-year versus an expected -7.2 per cent in April. Those numbers are even more negative than the 5.6 per cent contraction it saw in March.
This suggests that the economic downturn there might be speeding up. It’s also worrisome for a government that’s aiming to cut spending, since such numbers probably indicate that we could see a sharper contraction in GDP growth and thus smaller Italian tax revenues.
Two other eurozone industrial production numbers also came out for April: Finnish industrial production declined -3.2 per cent year-over-year which was than expected, and industrial production in the Netherlands declined a worse-than-expected 2.7 per cent.
Reuters master chartist Scott Barber shows how industrial production relates to GDP growth in this scary chart:
Photo: Scott Barber/Reuters