In September, euro zone industrial production fell back sharply after posting nice gains in both July and August. On a monthly basis, industrial production dropped by 2.0% M/M, marginally less than expected (-2.3% M/M). The August figure was upwardly revised from 1.2% M/M to 1.4% M/M. The details show that weakness was broad-based led by capital goods (-4.2% M/M) and durable consumer goods (-3.8% M/M), but also production of intermediate goods (-2.2% M/M), non-durable consumer goods (-1.3% M/M) and energy (-1.4% M/M) dropped significantly in September. Also national data show that softness was wide-spread was production dropped in Portugal (-5.8% M/M), Italy (-4.8% M/M), Ireland (-3.5% M/M), Germany (-2.9% M/M), France (-1.9% M/M), Spain (-1.3% M/M) and the Netherlands (-1.2% M/M), while production picked up slightly in Greece (0.1% M/M). After strong production in both July and August, this is clear sign that the euro zone economy is losing steam. While third quarter production was probably still strong, the outlook for the forth quarter is less rosy as orders dropped sharply over the previous months.