Eurozone industrial production unexpectedly fell at the start of the second quarter, casting a shadow over the economic recovery this year from a slump in 2023.
Eurostat said on Thursday in Luxembourg that output fell 0.1% in April from the previous month, revised down to a 0.5% increase the previous month. Economists had expected a 0.2% increase in the median of 29 forecasts.
The results mean the euro zone economy will be more reliant on services to sustain its recovery after a strong first-quarter expansion, with the European Commission forecasting growth of 0.8% in 2024, double last year's figure.
The interest rate cut by the European Central Bank last week could help the economy in future, but policymakers are refraining from further movement for now as they wait to gauge the strength of inflation.
Manufacturing is showing signs of “low stabilization”, they said last week, a year after an energy crisis sparked by Russia's invasion of Ukraine crippled production in Germany, the region's largest economy, with repercussions spreading to partner countries.
There were certainly some bright spots in Thursday's report: Apart from a decline in intermediate goods, all other categories increased, including capital goods, which rose 0.7%, its third consecutive month of gains.
Geographically, however, the decline was mainly seen in smaller countries in the region, with Luxembourg, Latvia and Ireland suffering the biggest declines. Of the euro area's four largest economies, only Italy saw a decline.
Luxembourg saw its industrial production fall by 5.9% compared to the previous year, one of the EU countries that recorded the largest year-on-year declines, doing better than Ireland (-15.7%), Latvia (-7.8%) and Finland (-6.8%).
(Additional reporting by Tracey Hindrichs)
