Estonian industrial production slowed down growth to 4% y/y in September, working-day adjusted data from Statistics Estonia showed on October 30.

The expansion is 0.6pp short of the annual reading for August, keeping output at a somewhat subdued level once again, compared to March-June when production growth increased by 10% y/y or more. Although industrial production has been slowing for three consecutive months now, the positive trend has lasted 13 months, reinforcing earlier forecasts that the Estonian economy is well on track to pick up speed in 2017.

Estonian GDP grew just 1.6% in 2016, still improving on the six-year low of 1.1% the preceding year. The economy made a good start to 2017, with first quarter GDP growing 4.4% and surging to 5.7% y/y in April-June. Expansion forecasts for 2017 range from 2.3% by the European Commission to beyond 3.5%, according to Swedbank.

In unadjusted annual terms, industrial production grew 1.5% as well. In seasonally adjusted monthly terms, output gained 2.3%.

The adjusted annual production growth in September was driven by expansion in the manufacturing and mining segments, where output expanded 4.4% and 30% on an annual basis, respectively. Energy production fell 15.3% y/y.

Most manufacturing sub-segments increased output, with the exception of computers, electronics, optical products and furniture. That repeated the pattern seen in August.

Around 66% of industrial output was sold on the external market, Statistics Estonia also reported. That has been nearly a constant ratio over the past few months.

According to unadjusted data, export sales of manufacturing production fell 1% y/y in September, while domestic sales rose 6% y/y. The annual figures for August showed growth of  3% and 7% respectively.