Eurozone industrial production fell as expected in July and is expected to weaken further in the second half of the year as manufacturing across the region continues to struggle.
Industrial production fell 0.3% in July after a revised flat figure in June, in line with consensus expectations and marking the third time output has fallen in the past four months.
Compared to July 2023, production was down 2.2%, but this was an improvement from the 4.1% decrease year-on-year in June.
During the month, production of durable consumer goods fell 2.8%, production of capital goods fell 1.6%, and production of intermediate goods fell 1.3%, dragging down production, but this was partially offset by production of energy and non-durable consumer goods, which increased 0.3% and 1.8%, respectively.
Notably, manufacturing powerhouse Germany saw its output fall by 3.0% after growing 2.0% in the previous month, while other countries, including Ireland (+9.2%), Croatia (+8.0%) and Belgium (+7.3%), saw strong recoveries from contractions in the previous month.
Analysts at Oxford Economics said if Ireland was excluded from the total, euro zone industrial production would have fallen 1.2% in the month.
“Today's weak euro area industrial data highlights the sector's weaker near-term outlook and poses downside risks to our forecast for 0.3% GDP growth in the third quarter,” said Mateusz Urban, senior economist at Oxford Economics.
But Urban said the industry's fortunes should improve in early 2025, with a “turning inventory cycle, a gradual recovery in consumer demand and lower interest rates all supporting the industry.”
