Eurozone industrial production rises less than expected in June
Eurozone industrial production rose a touch less than expected in June, according to the latest figures from Eurostat.
Industrial production increased 9.1% on the month following a 12.3% jump in May, coming in slightly below expectations for a 10% rise. Despite the increase, which marks a strong recovery from the low hit in April, production remained more than 10% below its pre-Covid levels.
The production of durable consumer goods rose by 20.2%, capital goods by 14.2%, intermediate goods by 6.7%, non-durable consumer goods by 4.8% and energy by 2.6%.
On the year, production fell 12.3% in June following a 20.4% decline in May. This was steeper than the 11.5% drop forecast by analysts.
Andrew Kenningham, chief Europe economist at Capital Economics, said: "Output will have risen more slowly in July, but we don’t expect a return to full health for at least the next couple of years.
"Business surveys such as the output component of eurozone manufacturing PMI and the German Ifo point to a further improvement in July, but last month’s increase will have been smaller given that fewer sectors were being re-opened. We expect industry to remain well below pre-crisis levels throughout this year and doubt that it will get back to full health within the next two years."
ING noted that the improvements still leave production down 11.6% compared to February, which means that there is still a large gap to bridge to pre-coronavirus production even though the start of the recovery is V-shaped.
"Whether the V will be completed in the summer months remains the question. We expect that it will fall short due to a lack of demand in the aftermath of the crisis, supply chain disruptions and even a possible flareup of the trade war. We now have to ask at what point will the mechanical recovery level off, giving a better idea of the lasting damage of the corona crisis.
"Even though it is unlikely that the V will be completed soon, recent survey data has been encouraging."