EU manufacturing output fell both on the month and the year in July, according to preliminary data from Eurostat.
Manufacturing production across the EU fell by an estimated 1.8pc from July 2022. Of the top five gas-consuming countries — Germany, the Netherlands, Spain, Italy and France — output was mixed, falling the most in the Netherlands at 8.3pc, but growing by 2.6pc in France. The bloc's largest economy, Germany, registered a year-on-year decrease of 1.3pc (see year-on-year graph).
Dutch industry has consistently struggled this year, with manufacturing output in each month over January-July dropping compared with the previous year. Dutch industrial gas demand slumped by 10pc over the first half of the year compared with one year earlier.
Production in most key gas-intensive sectors was much lower than a year earlier in July. The paper products and the non-metallic minerals sectors for the second month in a row led the decline, falling by 11.7pc and 10.7pc, respectively (see year-on-year sector table). That said, the manufacture of motor vehicles continued its strong year-on-year growth following the easing of chip shortages, although July's year-on-year increase of 8.9pc was the smallest for any month since January.
July was the third consecutive month in which manufacturing output declined on the year.
Output also lower on the month
EU manufacturing output fell by an estimated 2.1pc compared with the previous month, breaking a trend of three consecutive increases.
Output had previously increased compared with the previous month in all months but April, as manufacturing slowly recovered from its historic low point last year. But the decline in July comes as evidence that this recovery remains inconsistent, and while manufacturing as a whole has performed relatively strongly this year, gas-intensive industries have continued to struggle.
Almost all gas-intensive sectors experienced month-on-month declines in July output, with the exception of basic metals and the paper and paper products sectors (see month-on-month sector table). Motor vehicle output dropped by a significant 3.7pc compared with June, while the chemical sector also struggled.
Commission lowers EU growth forecast
The European Commission this week lowered its forecast for economic growth in the EU, with a notable downgrade for Germany.
Gross domestic product (GDP) in the EU is now projected to increase by 0.8pc this year and by 1.4pc in 2024, compared with growth of 1pc and 1.7pc in the commission's previous forecast in May. The commission now forecasts that the German economy will contract by 0.4pc in 2023 before returning to growth of 1.1pc in 2024.
Economic activity in the EU was "very subdued" in the first half of 2023, the commission said.
| EU year-on-year sector change | ±% |
| All manufacturing | -1.8 |
| Chemicals and chemical products | -9.1 |
| Non-metallic minerals | -10.7 |
| Food products and beverages | -1.7 |
| Paper and paper products | -11.7 |
| Basic pharmaceuticals | 2.6 |
| Basic metals | -4.3 |
| Coke and refined petroleum products | -7.1 |
| Motor vehicles and other transport | 8.9 |
| — Eurostat data calendar adjusted but not seasonally | |
| EU month-on-month sector change | ±% |
| All manufacturing | -2.1 |
| Chemicals and chemical products | -0.7 |
| Non-metallic minerals | -0.1 |
| Food products and beverages | -0.8 |
| Paper and paper products | 0.3 |
| Basic metals | 0.9 |
| Basic pharmaceuticals | -2.7 |
| Coke and refined petroleum products | -0.2 |
| Motor vehicles and other transport | -3.7 |
| — Eurostat data seasonally and calendar adjusted | |
