Euro Area: Industrial production swings back to contraction in February
Industrial output contracted a seasonally-adjusted 1.0% over the previous month in February, contrasting January’s 0.8% increase and marking the sharpest drop since April 2020. February’s decrease reflected broad-based downturns: the production of capital goods; non-durable consumer goods; durable consumer goods; energy and intermediate goods, all swung from expansion to contraction.
Looking at the individual economies for which data is available, industrial output contracted in 10 countries, while it expanded in six countries. Moreover, production declined in heavyweight France, Germany, Italy and Spain.
On an annual basis, industrial production dropped 1.6% in February, contrasting January’s 0.1% uptick, which had marked the first expansion since October 2018. Lastly, annual average variation in industrial production improved to minus 8.4% from January’s minus 8.5%.
Commenting on the release, Bert Colijn, Eurozone senior economist at ING, stated:
“Production had fully recovered to pre-pandemic levels at the start of the year but dipped back later. The decline will mean that the manufacturing contribution to GDP may disappoint a bit given the strong performance seen in the fourth quarter, adding to our view of another GDP contraction in 1Q before the economic rebound starts. In general, the manufacturing supply chain is showing signs of strain as demand has come surging back while issues related to the pandemic still trouble supply not least due to shipping problems and input shortage hick-ups. Auto production, which is hindered by chip shortages right now, was a significant drag on production in January and saw another sharp decline in February too.”