Euro Area: Industrial production contracts in January

Euro Area Industrial production January 2024

Euro Area: Industrial production contracts in January

Industrial output shrank 3.2% in month-on-month seasonally adjusted terms in January, which contrasted December’s 1.6% increase. January’s reading was driven by downturns in the production of capital and durable consumer goods as well as by softer growth in energy production. On the flipside, intermediate goods output rebounded, while production of non-durable consumer goods contracted at a softer clip.

Looking at the largest economies, industrial output fell in France and the Netherlands, while it increased in Germany and Spain. Notably, output plummeted by nearly 30% in Ireland, weighing on the overall result.

On an annual basis, factory output plunged 6.7% in January (December: +0.2% yoy).

Commenting on the outlook, ING’s Bert Colijn stated:

“With inventory cycles having peaked and consumers redeeming purchasing power as wage growth rises and inflation remains moderate, there are chances of recovery towards the end of the year. Then again, problems are not only related to the cycle. Structural problems for eurozone manufacturing seem to have worsened – think, for example, of the energy-intensive sector or geopolitical issues related to trade – which means that the upside for the medium term is limited.”

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