Eurozone industry: Is the end of the slump in sight?

According to Bert Colijn, senior economist at ING, Eurozone’s industrial production is likely to have increased in May but without an improved trade outlook, manufacturing could be in for a weak second half of the year.

Key Quotes

“Industrial production peaked in December 2017 and has been on a declining trend ever since. While the indicator is volatile and plenty of one-off factors have been impacting the industrial sector over the past year and a half, the trend is worrying. Although the reasons behind the downturn remain somewhat of a mystery, as some indicators are still pointing to decent performance, it does seem that weakening global demand and trade uncertainty have had a more significant impact than initially expected. This means more sluggishness could be on the cards. Remarkably though, this contraction in activity has not caused employment to decline. As long as that is the case, an outright eurozone recession remains unlikely.”

“Production seems sensitive to weakened global demand and trade uncertainty, not least because the decline in production coincided with falling confidence and the start of significant trade rhetoric from the United States.”

“Even though export growth is still positive, business surveys have been pointing to a contraction in orders from abroad.”

“While export growth has remained positive up to now, weaker production of intermediates used for exports indicates that weaker gross exports could well be on the cards over the summer months.”

“While the outlook for industry is clouded by quite a few mixed signals, sluggish global demand and trade concerns are expected to drag on in the months ahead. That means a swift bounce back in manufacturing production is unlikely in the second half of the year and concerns about eurozone GDP growth remain significant at least for the remainder of 2019.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.