Eurozone industrial production falls as expected
Industrial output in the eurozone fell as expected in July, with further weakness expected into the second half of the year as the manufacturing sector across the region continues to struggle.
Industrial production contracted by 0.3% in July, after a revised flat reading in June. This was in line with the consensus forecast and marked the third time over the past four months that output has declined.
Compared with July 2023, production was 2.2% lower, though that was an improvement from the 4.1% annual decline in June.
Over the month, production was dragged down by a 2.8% decline for durable consumer goods, a 1.6% drop for capital goods and a 1.3% fall for intermediate goods, partially offset by increases of 0.3% and 1.8% for energy and non-durable consumer goods, respectively.
Notably, manufacturing powerhouse Germany saw production drop by 3.0% after 2.0% growth the month before, though others saw a significant rebound after contracting the month before, such as Ireland (+9.2%), Croatia (+8.0%) and Belgium (+7.3%).
According to analysts at Oxford Economics, if Ireland was excluded from the total tally, eurozone industrial output would have fallen by 1.2% over the month.
"We think that today's poor eurozone industrial data underscores weak near-term prospects for the sector and poses a downside risk to our 0.3% GDP growth call in Q3," said Mateusz Urban, senior economist at Oxford Economics.
However, Urban said industrial fortunes should improve in early 2025 "as a turn in inventory cycle, a modest pick-up in consumer demand and lower interest rates will all provide support to the sector".