Eurozone industrial output experienced a steeper decline in July than anticipated, suggesting a further slowdown in the bloc’s economy. According to figures published by the European Union statistics agency Eurostat, total production fell by 1.1% compared with June, surpassing economists’ predictions of a 0.8% decline.
Decline in Production Continues
Compared to the same period last year, July production was down by 2.2%, exceeding economists’ expectations of a 0.5% decrease. Notably, June’s output of 0.4% was revised down from the previously estimated 0.5%.
Weak Demand Across Industries
The sluggish industrial output is in line with weak economic growth in the second quarter of the year. The eurozone’s GDP increased by just 0.1% during this period, according to revised figures from Eurostat. The data also reveals that demand was feeble across industries and household consumption in July. Production of capital goods and durable consumer goods both suffered significant declines, while energy production experienced a slight increase of 1.6%.
Divergent Performance among Major Economies
Germany and Italy witnessed lower output in July. Conversely, France and Spain reported higher month-on-month production. This divergence reflects broader trends in the eurozone’s major economies.
ECB Announcement Looms
The news of faltering industrial output precedes the European Central Bank’s upcoming decision on interest rates. On Thursday, policymakers will meet to determine whether to continue their unprecedented cycle of rate hikes aimed at controlling demand and addressing rapid price increases.
The ECB will also provide its latest forecasts for inflation and growth in the bloc. Many market observers anticipate a more pessimistic outlook for the eurozone economy this year and next. The European Union itself has already revised down its expectations for the bloc’s economic growth, now projecting 0.8% growth this year and 1.3% in the following year.
We will continue to monitor the situation as the ECB makes its decision and issues its updated forecasts.