• May industrial production -0.2% vs +0.2% m/m expected
• Prior +0.1%; revised to +0.3%

That’s a notable miss on estimates with the country-level breakdown showing a sizable drop in industrial output for Ireland (-5.2%) especially. Is it another case of the volatility from the pharmaceutical and technology sectors showing up for Ireland again? This was evident in January (-10.2% drop), which also had a marked impact on Ireland’s Q1 GDP as noted here at the time.

Looking at the monthly breakdown:

• Intermediate goods -0.3%
• Energy production +2.2%
• Capital goods +0.3%
• Durable consumer goods -1.1%
• Non-durable consumer goods +0.8%

It’s a mixed bag but if you strip out the production of energy, then the overall drop on the month for May actually looks worse.

In any case, this is very much lagging data and not one to have much of any impact to the ECB outlook. As things stand, the central bank is going to keep policy unchanged in July but there is a build up in expectations ahead of September after the summer break.

Traders have fully priced in a 25 bps rate hike for September with ~42 bps of rate hikes priced in by year-end.