Friday

3rd Jul 2020

Industrial output figures cast doubt on EU recovery

  • Industrial output in euro area fell in June, wiping out a mild rise recorded in May (Photo: Austria Solar / ESTIF)

Europe's industrial production fell in June after a mild improvement in May, making economists wonder if the long-awaited recovery is actually that close.

The clearest drop has been recorded in the 16 states of the euro area. Back in May, factory output rose by 0.6 percent while in June it fell by 0.6 percent, according to estimates by the EU's statistical office Eurostat published on Wednesday (12 August).

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In the 27-strong bloc as a whole, production remained steady in May and fell in June by 0.2 percent.

Across the member states, factory output rose in 10 countries, most notably in Ireland (+9.3%) and in the Netherlands (+2.1%). It dropped in seven states, mainly in Denmark (-2,7%) and Italy (-1,1%). Germany as the biggest EU economy stayed stable in June after a record rise of 4.8 percent in May.

Compared to June last year, EU industrial output was almost 16 percent lower this year, with the deepest slump in the "durable consumer goods" sector, as the demand for such products falls due lower incomes and higher unemployment.

Some economists say that the unexpected June slump may have been caused by companies trying to run down stocks, with more orders for manufacturing goods to come later this summer.

"Going forward, the eurozone manufacturing sector should be increasingly helped by the major de-stocking that has occurred while orders now appear to be stabilising after plunging in late-2008 and early-2009," Howard Archer, chief European economist at IHS Global Insight said, according to AFP.

He added that for a significant and sustainable manufacturing recovery to develop, "there needs to be extended growth in orders in both domestic and foreign markets and this currently remains far from certain."

Industrial output is a crucial component of Europe's overall economic output figures, with the early GDP estimates for the second quarter due to be published by Eurostat on Thursday (13 August).

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