Ireland drags on already-weak eurozone industrial output
By Josh White
Date: Wednesday 14 Sep 2022
(Sharecast News) - Industrial output in the eurozone fell more than expected in July, as a plunge in Ireland dragged on broader weakness across the common currency area.
According to fresh data from Eurostat on Wednesday, industrial production in the euro area, excluding construction, fell 2.3% month-to-month in July, after a 0.7% increase in June.
That was below consensus expectations for a fall of 1.0%.
The year-on-year rate slipped to -2.4%, from +2.4% in June, and also below the +0.4% pencilled in by economists.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said the data was consistent with the view that the economy was entering a technical recession, due in part to softening activity in the industrial sector.
"That said, the downside surprise in July was primarily due to an 18.9% month-to-month plunge in Irish production, almost surely linked to falling output in the so-called 'modern sectors', linked to multinationals' transfer pricing activity," Vistesen explained.
Irish GDP leapt 8% in the first half, so mean reversion was always going to happen "eventually", Claus Vistesen added.
"The data elsewhere, however, were soft too - production in Germany and France fell by 0.7% and 1.5%, respectively, while output in Spain dipped by 1.0%."
Across sectors, production in capital goods plunged by 4.2%, while output in intermediate goods fell by 0.8%.
Energy production advanced by 0.4%, while durable consumer goods production dipped by 1.6%, with non-durable consumer goods output advancing by 1.2%.
"One month does not make a trend, but survey data send a clear signal of further weakness in eurozone industrial output in coming months," Vistesen noted.
"The carry-over - the change in the third quarter if output is unchanged through September and August - is now -1.1%, in line with the purchasing managers' index."
Reporting by Josh White at Sharecast.com.
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