Eurozone industrial production rebounds in August

Eurozone industrial production posted a robust 1.8% month-on-month increase in August, marking a significant rebound from the 0.5% contraction in July, according to fresh data from Eurostat.

The rise was mirrored by a 1.3% increase across the broader EU.

On a year-on-year basis, industrial output in the euro area showed modest growth, advancing by 0.1%, while the EU saw a 0.2% uptick.

Germany played a key role in driving the monthly recovery, with industrial output surging by 3.3%, offsetting its July decline.

Other major economies, including France and the Netherlands, also experienced notable gains of 1.4% and 2.2%, respectively.

The strongest performer was Ireland, with a 4.5% monthly increase, while Luxembourg saw the sharpest decline, down by 9.2%.

Capital goods production surged by 3.7% in the eurozone, contributing significantly to the overall increase, while energy output rose by 0.4%.

However, the production of intermediate goods fell by 0.3%, reflecting mixed results across different sectors.

Analysts from ING welcomed the strong August data, noting that it offers some short-term support for third-quarter economic growth after a series of downbeat survey results.

“A strong 1.8% month-on-month increase in production provides some support for third-quarter growth expectations,” ING said.

However, they cautioned that the broader outlook for the industrial sector remains uncertain, citing ongoing challenges such as increased competition from China, volatile energy prices, and supply chain disruptions.

Despite the positive monthly figures, the eurozone’s industrial sector was still facing headwinds, with ING warning that while inventory runoffs could eventually support production, a sustained recovery was not expected before 2025.

The August surge, though encouraging, was seen as a temporary boost rather than the start of a broader revival.

“We don’t think the strong August production data is the start of this though - in fact, it looks like improvements in the inventory cycle will be more of a story for next year.”

Reporting by Josh White for Sharecast.com.