Industrial production falls across Eurozone

Industrial production fell sharply across the Eurozone in October, official data showed on Wednesday.

According to Eurostat, the European Union’s statistical office, seasonally-adjusted industrial production fell by 2.0% in October, compared to September’s downwardly-revised uptick of 0.8%. Consensus had been for a 1.5% contraction.

In the wider bloc, industrial production fell by 1.9%, reversing September’s 0.7% increase.

Production of non-durable consumer goods edged ahead 0.3%. All other categories fell, however, with production of energy down 3.9%, durable consumer goods off 1.9% and intermediate goods falling 1.3% in the Eurozone.

Among member states, in Germany - the bloc’s largest economy - industrial production fell 0.9%, compared to a rise of 1.3% a month previously.

In Spain it fell 0.4%, by 1.0% in Italy and by 2.6% in France, after the country was hit by industrial action. The biggest faller was Ireland, which saw production tumble 10.7%.

Paolo Grignani, senior economist at Oxford Economics, said: "After several months of somewhat surprising resilience, it looks like the Eurozone industrial sector is, at last, taking the brunt of the energy crisis.

"Fourteen out of 19 countries posted a monthly drop, making this one of the most broad-based contractions of the last years.

"What’s more, recent survey data suggest that the worst for the sector is yet to come, as the backlog of orders that had offered support in the last months is being reduced, inventories are piling up and new orders sink."

Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said: "We doubt the weak start to industry will prevent the European Central Bank from hiking interest rates again tomorrow, as inflation is too high still. But it is yet another reason for the bank to pivot to smaller rate hikes. We look for it to raise rates by 50 basis points after two consecutive 75bp increase."

The ECB is due to announce its latest decision on the cost of borrowing on Thursday.

Compared to October 2021, industrial production increased by 3.4% in the Eurozone and 3.7% in the EU.