Industrial output rebounds in May

Latest reading: Industrial production expanded 1.7% month-on-month in seasonally adjusted terms in May (April: -2.2% mom s.a.). The improvement was driven by rebounds in capital goods, non-durable consumer goods and energy output, partly due to renewed front-loading ahead of greater U.S. tariffs. Pharmaceutical output rose over 27%—an all-time high—mainly thanks to a sharp recovery in the Irish industrial sector, which hosts a large chunk of the Euro area’s pharma production. Germany and Spain also saw rebounds in industrial production, while the downturn eased in France and Italy swung into contraction. On an annual basis, industrial production rose 3.7% in May, notably above April’s 0.2% expansion and marking the best result since September 2022. Accordingly, the trend improved, with the annual average variation of industrial production coming in at minus 0.5% in May, up from April's minus 1.2%.

Panelist insight: ING’s Bert Colijn commented: “In the months ahead, the picture for eurozone industry remains muddied by all the tariff developments. Underneath all the trade war headlines, there are some positive signs of eurozone manufacturing bottoming out, but this seems to be a slow-moving process which could easily be derailed by high tariffs. Did someone say 30%? In any case, the strong May production data suggests that second quarter eurozone GDP will not suffer as much as we previously thought from a reversal of US frontloading. With weak service sector data, there is no room for optimism though; the eurozone economy seems set for stagnation in the short term. How much Americans stock up on medicine will not change that.”

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