Eurozone industrial production drops sharply in July

Eurozone industrial production declined sharply in July, according to the latest data from Eurostat.

Industrial production in the 19 countries that share the euro was down 1.1% from June compared to a 0.8% rise the month before and missing expectations for a 0.9% fall.

The production of capital goods declined by 1.7%, while energy production was 1.4% lower and durable consumer goods production fell 0.7%. The production of intermediate goods was down 0.5% while production of non-durable consumer goods was unchanged.

On the year, industrial production in the euro bloc was 0.5% lower, which was ahead of analysts’ expectations of a 0.7% drop.

In the EU-28 group of countries, industrial production fell 1% on the month and 0.1% on the year.

Capital Economics said the weakness in the eurozone industry in July suggests that industrial production will struggle to expand at all over the third quarter.

European economist Stephen Brown said: “Some of the weakness in July was probably due to temporary factors, with German automakers in particular starting their annual summer shutdowns in July rather than August this year.

“Yet the auto industry still only accounted for about half of the 1.9% drop in output in Germany, suggesting that a sharp rebound in overall production might not be on the cards for August. As such, today’s data imply that there’s a good chance that industrial output will contract over Q3 as a whole.”