E Economics

Eurozone Industrial Production For May Will Surprise Downward

13 July, 2023
eurozone industrial production

On Thursday, Eurostat will release the first estimate of Eurozone Industrial Production (IP) for May. According to the Bloomberg consensus, on a MoM basis, Eurozone IP is expected to increase by 0.3%e (v +1.0% in April). Regional surveys and my proxies suggest that the consensus is optimistic.

Regional Surveys Suggest Eurozone Industrial Production Will Surprise Downward

Although several countries experienced a sharp increase in industrial production in May such as France Spain or the Netherlands, it wasn’t the case for all Eurozone members. Based on Eurostat measure, on a MoM basis, industrial production decreased by 1.2% in Belgium (-4.3% prior) and 4.9% in Ireland (-25.2% prior). Baltic countries were also under pressure with Latvia and Lithuania showing a fall of respectively 1.1% and 2.8%.


Implications for Eurozone Economy and ECB

Given the sharp decline registered in March, it’s likely that industrial production will contract in 2Q, further weighing on GDP. It comes as latest monetary developments in the Eurozone suggest the economy is likely to face a longer recession than expected.

As a result, as noted by European Central Bank Governing Council member Boris Vujcic yesterday, the outcome of September’s interest-rate meeting remains “very open” especially in a context where signs of disinflation are gaining traction.