The advance in manufacturing looks particularly encouraging on the face of it, but a deeper look into the details leaves a mixed aftertaste. Particularly, the output volatility of some bulky machinery items might have distorted the headline number on the upside, while oil refining growth of more than 7.0% might have been related to some temporary factors and is in any case unlikely to be sustainable given flatlining crude oil output. Another example is the bounce in car output into the positive area (4.0% YoY) amid widespread corporate news over looming cutbacks in workshifts. Among other industries, we note a sustained pickup in food processing amid bans on meat imports from the EU and acceleration in the production of building materials, which might have been related to an earlier start to the construction season due to warmer weather.
Overall, the strong and unexpected advance in manufacturing looks to be a derivative of several temporary drivers and is unlikely to be sustained in an environment of softening domestic and fragile export demand, in our view.