Euro Area Industry August 2021

Euro Area: Industrial production contracts in August amid supply chains bottlenecks

October 15, 2021

Industrial output decreased a seasonally-adjusted 1.6% over the previous month in August, contrasting July’s 1.4% rise. August’s drop reflected downturns in the production of intermediate, capital, durable and non-durable consumer goods. On the other hand, the production of energy bounced back over the prior month.

Looking at the individual economies for which data is available, industrial output shrank in 10 countries, while it expanded in eight countries. Within the most important economies, production increased in France and Spain while it fell in Germany and Italy.

On an annual basis, industrial production increased 5.1% in August, following July’s 8.0% rise. Lastly, annual average growth in industrial production improved to 5.8% from July’s 4.8%.

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

“The supply side problems are starting to be reflected more in the growth figures for 2H 2021, and are contributing to the slide in GDP growth expected for this half of the year. We still expect strong overall growth to persist and take solace from continued strong incoming demand. For now, it does not look like supply side problems will cause a hard landing, but to cause some turbulence along the flight back to normality.”

Overall, our panelists see industrial production expanding 3.1% in 2022, which is unchanged from last month’s forecast. For 2023, panelists see industrial production growing 1.8%.

Author: Massimo Bassetti, Senior Economist

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