Industrial production growth decelerated from 6.9% y/y in April to 6.0% y/y in May, according to figures of the statistical office, published on Tuesday. The slowdown was primarily driven by the manufacturing sector, where output growth eased down from 7.4% y/y in April to 6.5% y/y in May. Meanwhile, utility output increased by 0.7% y/y, following a decline in April.
Looking at the breakdown of main industrial groupings, the output of intermediate goods picked up its growth to 6.3% y/y, which bodes well for manufacturing in the upcoming months. Meanwhile, the production growth of capital goods decelerated to 12.3% y/y, reaching its lowest level since April 2017 and likely signaling for a slowdown of investment activity. The production of consumer goods saw its growth quicken to 5.9% y/y, driven by both durable and non-durable goods and underpinned by strong demand.
Average growth of industrial production in April-May came in at 6.5% y/y, down from 8.0% y/y in the same period last year, hence depending on performance in June the sector’s contribution to GDP growth might decrease in Q2. Still, looking forward, we do not expect further significant slowdown of industrial production growth, considering that confidence in the sector has remained stable and given that demand remains strong, especially at the domestic level, fueled by favorable labor market developments, including rising wages and falling unemployment, in addition to stable lending conditions.