Industry in Eurozone

Eurozone - Industry

Industrial output dips in February before containment measures kick in

Industrial output dipped a seasonally-adjusted 0.1% over the previous month in February, contrasting January’s 2.3% jump. The reading surprised market expectations of a 0.2% decline marginally on the upside.

February’s decline was underpinned by sizable downturns in the production of capital and durable consumer goods, as well as by softer expansions in intermediate and non-durable consumer goods output. On the flip side, the production of energy swung from contraction to growth.

Looking at the individual economies for which data is available, industrial production fell in 10 countries in February, including heavyweights Italy and Spain—although the latter recorded just a slight decrease. On the flip side, it increased in 6 economies including major players Germany and France.

On an annual basis, industrial production declined 1.9% in February, a sharper contraction than January’s 1.7% drop. Lastly, annual average variation in industrial production inched down to minus 1.7% from January’s minus 1.6%.

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

“Perhaps the most important question is when countries that have restricted factory production will lift these measures and when companies will then actually resume production. In Spain for example, factories have reopened, which means that the April data most certainly will be the weakest. In countries that have not restricted production, we still see factories shut down to curb the virus. The resumption of production will be the largest factor in determining the bottom for industrial production. These issues will make or break the start of a recovery for eurozone industry in the weeks ahead.”

Overall, our panelists see industrial production plunging 4.5% in 2020, which is down 4.3 percentage points from last month’s forecast. For 2021, panelists see industrial production growing 4.0%.