Eurozone looks set for more disappointing growth numbers

14th July 2014

The sharp fall in eurozone industrial production in May suggests that the recovery in the sector is flagging before it has even really begun.

According to Capital Economics, production dropped by 1.1% on the month, dragging the annual growth rate down to 0.5%, broadly in line with consensus expectations as output fell in most sectors, with only the volatile energy component recording an increase.

The geographical breakdown showed that the fall was broad-based across the region, with the weakness in the eurozone’s core particularly worrying.

May’s outturn, and the small downward revision to April’s rise, suggests that industry will probably fare worse in the second quarter than it did in the first.

Eurozone: Poor second quarter numbers appear likely

In order to match the first three months of the year’s sluggish 0.2% quarterly rise, production would have to rebound by 1.4% in June.

Jessica Hinds,
 European economist at Capital Economics believes this is possible given that May’s drop was exacerbated by temporary factors such as the weather and the timing of public holidays.

She added: “But the underlying outlook for the sector seems weak and survey data indicate that the industrial recovery may have already peaked. All in all, then, eurozone industry is shaping up for a poor performance in the second quarter, which does not bode well for the overall economic recovery.”

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