After a series of recently more mixed data, industrial production is now also likely to show a more volatile pattern. Following steady gains during Q4 2017, output declined a hefty -6.6% m/m (+2.7% y/y) in January. By major goods groups, the drop was broad-based. Only the production of non-durable consumer goods recorded further growth. The nosedive is in line with manufacturers’ previous output projections. At the same time, the updated projections for February (+9% m/m) and first-time figures for March (-2.7% m/m) confirm that production will – on balance – pick up again. Fundamentally, the continued robust exports argue against sustained weak production. Despite the January setback, industrial production will likely grow modestly in Q1 2018. Retail sales also turned out be weak in January (-1.8% m/m). To a large degree this probably reflects a pullback from brisk growth in Q4 2017 as well as bad weather. Overall, the economy is expected to continue its expansion at a moderate pace.
