Industrial production growth accelerated to 4.4% y/y in June, from 2.0% y/y in May, according to figures of the statistical office, published on Monday. The acceleration was driven by the utility sector, where output growth picked up tangibly to 23.5% y/y, up from 2.8% y/y in May, due to increased electricity and gas supply. On the other hand, manufacturing output growth slowed down significantly to 0.8% y/y, underpinned by production of leather, machinery, motor vehicles, computers and electrical equipment.
Looking at the alternative data breakdown, the output of intermediate goods increased by 0.5% y/y, after dropping in May, but nevertheless remained weak. The production growth of capital goods eased down to 5.4% y/y, down to its lowest level since January this year. Moreover, the output of consumer durable and non-durable goods dropped by 8.9% y/y and by 2.6% y/y, respectively.
All in all, the improvement in June was largely attributed to the utility sector, likely due to one-off seasonal factors. On the other hand, the slowdown of manufacturing production growth was more or less within expectations, given projections for moderating demand among Latvia’s trading partners.