Supply shortages hit Eurozone industrial production
Eurozone industrial production fell in August, official data showed on Wednesday, as supply constraints weighed heavily.
According to Eurostat, the European Union’s statistical office, seasonally-adjusted industrial production was down 1.6% in August, and off 1.5% across the wider bloc. In July, industrial production rose by a downwardly-revised 1.4% and by 1.2% in the Eurozone and EU respectively.
Within the August figure, production of capital goods slumped 3.9%, durable consumer goods by 3.4% and intermediate goods by 1.5%. Production of energy rose 0.5%.
Year-on-year, industrial production in the Eurozone fell back from July’s 8.0% rise to report growth of 5.1%, although that remained above consensus, for 4.7%.
Among individual countries, Germany - the bloc’s largest economy - saw industrial production fall 4.1%. In Spain it nudged 0.1% higher, and rose 1.0% in France. Italy was 0.2% lower.
Germany’s economy is heavily reliant on manufacturing and car production especially. But manufacturing worldwide has been rocked by supply constraints, including higher freight charges and a shortage of semiconductors.
Demand is soaring, however, as economies re-open from the worst of the pandemic.
Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said: "August’s fall in Eurozone industrial output was no surprise after last week’s release of abysmal German data, and suggests that industry will have done little to support the economy in the third quarter overall.
"Today’s data confirmed our view that July’s increase was just a blip, and means that output’s rise about its pre-virus level was fleeting.
"Looking to the fourth quarter, lingering supply constraints and, as a result, rising input costs will keep a lid on industrial output. The energy crunch could spell big trouble for the sector as it threatens voluntary or forced production outages."
Bert Colijn, senior economist, Eurozone, at ING, said: "While demand remains strong, with robust growth in new orders every month, supply side problems continue to weight on further production gains.
"Of all the current shortages, semiconductors are proving to the most disruptive to the macro picture, and the auto sector is at the centre of the storm. Auto production in the Eurozone is now 24% below the November level, also the peak before production hiccups started to occur. This drags on total production substantially.
"Overall, with chip shortages expected to last well into 2020, and perhaps even 2023, the questions is whether German weakness will continue."