Euro Area Industry August 2022

Industrial output increased 1.5% over the previous month in seasonally-adjusted terms in August, contrasting July’s 2.3% decrease. August’s result reflected turnarounds in the production of capital and durable consumer goods as well as a softer contraction in the production of intermediate goods. On the flip side, energy production fell at a more pronounced pace, while the production of non-durable consumer goods expanded at a softer clip.

Looking at the individual economies for which data is available, industrial output expanded in ten countries, while it contracted in seven. Focusing on the most important economies, production increased in France, Italy and Spain while it decreased in Germany and the Netherlands.

On an annual basis, industrial production rose 2.5% in August, contrasting July’s 2.5% decrease. Lastly, annual average growth in industrial production moderated to 0.4% from July’s 0.5%.

Commenting on the outlook, Bert Colijn, senior economist at ING, stated:

“Overall, while the outlook for production is weakening, this data in itself is no reason for the ECB to change tack in terms of its rate hike strategy. For a dovish pivot, the ECB would need to see evidence that the economy is contracting quickly. While a quarterly contraction in manufacturing is definitely a possibility, these August data are far from alarming.”

Overall, our panelists see industrial production expanding 0.7% in 2023, which is unchanged from last month’s forecast. For 2024, panelists see industrial production growing 1.3%.