Euro Area: Industrial production contracts in May

Euro Area Industry May 2021

Euro Area: Industrial production contracts in May

Industrial output fell a seasonally-adjusted 1.0% over the previous month in May, contrasting April’s 0.6% increase. May’s drop reflected downturns in the production of capital, intermediate and non-durable consumer goods as well as in the production of energy. Moreover, the pace of expansion in the production of durable consumer goods more than halved.

Looking at the individual economies for which data is available, industrial output shrank in 12 countries, while it expanded in five countries. Within the most important economies, production declined in France, Germany, Italy and Spain, while it grew in the Netherlands.

On an annual basis, industrial production increased 20.5% in May, as it benefited from a low base effect, following April’s 39.4% jump. Lastly, annual average variation in industrial production improved to plus 2.8% from April’s minus 0.6%.

Commenting on the release, Bert Colijn, Eurozone senior economist at ING, stated:

“The outlook for the manufacturing industry remains bright despite disappointing production figures. Surveys suggest that demand continues to flow in at a very fast pace and that backlogs of work are increasing. This means that the big production rebound has not peaked, but mainly pauses because of the limited availability of inputs. We expect further improvements when supply chain problems are resolved and much more support to the GDP recovery from manufacturing in 3Q and 4Q.”

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