- Eurozone factory production jumps as Europe emerges from recession
Production at eurozone factories picked up speed in April as the region recovers from its Covid-19 recession.
Eurozone industrial production rose 0.8% month-on-month in April, twice as fast as economists expected. That followed a 0.4% rise in March, and a 1.2% contraction in February, as Covid-19 restrictions hit the sector.
April’s increase was driven by a 3.4% increase in production of durable consumer goods (longer-lasting items such as electrical appliances, electronic products and furniture), while energy production was 3.2% higher.
Production of capital goods (physical assets such as machinery, buildings and tools) rose by 1.4%, while intermediate goods production (used to make final products) was 0.8% higher.
Non-durable consumer goods production dipped 0.3%.
On an annual basis, eurozone industrial production was over 39% higher than a year ago – when Europe was locked down after the first wave of Covid-19 infections.
Josie Dent, managing economist at CEBR, says this pickup in industrial output provides evidence that the eurozone economy is emerging from the double-dip recession that it first entered in Q1 2020.
“Today’s eurozone industrial output growth of 0.8% in April beats expectations of a 0.4% monthly expansion. This is an encouraging sign of recovery as vaccinations pick up pace and restrictions ease. Cebr expects 4.3% eurozone GDP growth in 2021.”
But Dent adds that the Delta variant of the virus poses a risk to this recovery, as it has started to spread in the continent.
She also points out that there was considerable variation across Europe’s factories in April:
“Monthly output growth was fastest in Belgium, with production rising by 7.4%. At the other end of the scale, a contraction of 2.4% was witnessed in Lithuania. Lithuania was in a nationwide lockdown for the majority of April, with restrictions easing at the end of the month.”