Industrial Trends in Europe Are Challenging

In April, manufacturing IP among select early reporting EMU members and other European economies fell in nine of the fifteen countries in the table. Among the 13-early reporting EMU members, the median manufacturing output decline was 2% in April. The percentage of EMU economics with IP accelerating month-to-month remained low at 38.5% in April compared to 30.8% in March. In February, output showed a preponderance of acceleration (69.2%).

Sequential growth Over three months, six months and 12 months, IP among EMU members showed declines in the median gauge, but the drop is not worsening persistently as the annualized output drop over six months was less than the drop over 12 months. But then, the median drop over three months accelerated again surpassing the speed of the drop over both six months and 12 months.

Manufacturing output momentum EMU members show the proportion of members with output acceleration at or below 50% on all horizons. In addition, over three months, manufacturing output declines in nine of fifteen reporters in the table, eight of fifteen reporters over six months, and eight of fifteen over 12 months. Output is not just weak, but it is declining in a preponderance of European economies. Germany, the largest EMU economy, shows manufacturing output down over three months but rising over six months and 12 months. France, the second largest EMU economy, has no output declines over these periods. Italian manufacturing output declines each of the periods. Spain, the fourth largest economy, shows output declines over three months and 12 months. So far, the largest of the large economies in the EMU show the most resilience. But Germany gives way to an output decline over three months. In addition, Belgium, Finland, the Netherlands, Portugal, and Norway- in addition to Italy- show output declines over each of the three periods. Only the Dutch and Norwegians show progressive deterioration in this group. However, Germany, with only one output decline over three months, shows progressive slowing in growth from 12-months, to 6-months, to 3-month; so, do Malta and Ireland, two of the smaller economies.

QTD Quarter-to-date (QTD) output is falling across most reporters in the table. The median annual rate drop among EMU members is -8.6%. Only three countries do not show falling output QTD in manufacturing; they are France, Greece, and Sweden.

Output levels Comparing output levels in April 2023 to January 2020, there are eight in the table with the manufacturing output lower in 2023 than in 2020 – that’s a lower amount of real output in eight countries over a three-year period. Interestingly, each of the four largest EMU members (Germany, France, Italy, and Spain) show lower levels of manufacturing activity in 2023 than in 2020.

Summing up The upshot of this is that manufacturing output in the EMU region remains quite varied with consistently poor momentum. The level of economic activity is stunted. Performance in the second quarter, QTD, with only one month of data available, shows widespread manufacturing output weakness continuing.