Eurozone: Industry drops sharply in May
July 14, 2014
In May, industrial production contracted a seasonally-adjusted 1.1% over the previous month according to data released by Eurostat on 14 July. The drop, which contrasted the revised 0.7% expansion recorded in April (previously reported: +0.8% month-on-month), was smaller than the 1.2% fall market analysts had expected and marked the largest contraction in 20 months.
The dates on which public holidays fell likely affected May’s result. According to Martin Van Vliet, Senior Economist at ING: “May’s decline in output may have been exacerbated by the timing of public holidays, as this may have prompted people to take extra days off work (which is not adequately captured in the seasonal and working day adjustment).” May Day was celebrated on a Thursday this year, which prompted many workers to take off Friday as well and this may have negatively affected economic activity.
At a country level, Portugal (-3.6% month-on-month) and Germany (-1.4% mom) were the region’s worst performers. At the other end of the spectrum, The Netherlands (+1.1% mom) and Estonia (+0.9% mom) recorded the best results. Output contracted in the other three major regional economies: France recorded the largest drop (-1.3% mom), followed by Italy (-1.2% mom) and Spain (-0.9% mom).
On an annual basis, industrial production expanded 0.5%, which marked a slowdown over the 1.4% expansion registered in April. Nevertheless, annual average growth in industrial production rose to 0.6% in May, which was up from the 0.3% recorded in the previous month.
Author: Armando Ciccarelli, Head of Data Solutions