Industrial output in the eurozone was lower than expected in May, indicating the impact of rising interest rates on the bloc’s economy.
According to data from the European Union statistics agency Eurostat, industrial production, encompassing manufacturing, mining, and utilities, increased by 0.2% in May compared to the previous month. This growth rate was slightly below the anticipated 0.3% rise forecasted by economists. Additionally, it represents a slowdown from the previous month of April.
Of particular note, the production of capital goods, which are utilized in the production of other items, experienced a notable increase of 1%. Conversely, energy production witnessed a decline of 1.1%.
Among the major economies within the eurozone, Germany was the only country to register a decline in industrial production, with a 0.2% fall.
This sluggish growth potentially indicates that high interest rates are negatively impacting investment and demand. Throughout this year, the European Central Bank has maintained elevated interest rates as part of its efforts to reduce inflation to a targeted level. In June, the bank further increased its deposit rate by a quarter of a percentage point, bringing it to 3.5%.
Overall, these findings highlight the potential economic challenges facing the eurozone due to rising interest rates and provide insights into specific sectors experiencing setbacks.