Industrial production in the eurozone plunged by a record 17.1 per cent in April, as the coronavirus pandemic caused disruption to businesses across almost all manufacturing and construction sectors of the European economy.
The figures were slightly better than most analysts had expected, but still underlined how many factories and building sites were forced to close or drastically scale back their activities at the height of the strict lockdowns imposed to contain the virus.
April’s drop was the biggest fall since records started in 1991, according to Eurostat — beating the record set the previous month, when industrial production dropped by 11.3 per cent. Economists surveyed by Reuters had on average expected a decline of 20 per cent in April.
“In April 2020, the Covid-19 containment measures widely introduced by member states continued to have a significant impact on industrial production,” said Eurostat. “Overall, industrial production in the euro area and EU has fallen to levels last seen in the mid-1990s.”
Production has begun to ramp back up more recently at many manufacturing and construction companies, high-frequency data indicators suggest. The figures are more up to date than official economic indicators, although they are also experimental and the extent to which they reflect the subsequent trends documented in official data is variable.
The European Central Bank forecast this month that the eurozone economy would shrink by 8.7 per cent this year, and its president Christine Lagarde said the downturn had bottomed out in May as lockdowns were partially lifted, although the recovery was so far only “tepid”.
Economists at Morgan Stanley expect that eurozone industrial output has experienced a “strong bounce” in May, adding: “Despite the contraction and lingering uncertainty, we see the virus under control in Europe and a robust policy response underpinning confidence in the recovery.”
Europe’s largest economies were badly hit by April’s downturn. In Spain industrial output fell by 21.8 per cent; in France it was down 20.1 per cent, Italy decreased 19.1 per cent and Germany declined 18 per cent.
Hungary, Romania, Slovakia and the Czech Republic were among the countries with the steepest falls; industrial output dropped between 23 and 30 per cent in all four countries in April, as the contraction in German demand rippled across into its eastern neighbours.
The countries with the smallest falls in industrial production included Finland, Denmark, Croatia, the Netherlands, Latvia and Ireland, where it fell by 8 per cent or less.
In the UK, industrial production fell by a historic 20.3 per cent between March and April, the Office for National Statistics announced separately on Friday.
Europe’s carmaking industry came to an almost total halt in April, prompting France and Germany to both announce measures to support the sector. German car production fell by 75 per cent between March and April, while in France it was down 88 per cent.
Airbus, Europe’s aerospace champion, cut production by a third in April due to a sharp drop in demand for planes from pandemic-stricken airlines, and Paris this week announced a €15bn support package for aerospace companies.
“Government support, such as the car subsidy schemes, should provide some relief for the sector later in the year,” said Rosie Colthorpe, economist at Oxford Economics, adding that Friday’s data were consistent with an overall 12 per cent contraction in the eurozone economy in the second quarter.
Italian production of textiles, apparel, leather goods and accessories plunged more than 80 per cent year on year in April, according to figures released by the Italian statistics agency.
Spain’s production of motor vehicles and trailers declined 86.3 per cent between March and April, while its clothing manufacturing fell two-thirds and its leather and shoe output dropped 60 per cent.
Many countries reported that pharmaceuticals, farming, food and energy production were the least affected by the crisis, even if they were still down in April.
Eurostat said durable consumer goods production fell almost 28 per cent across the bloc in April, while capital goods output was down 27.3 per cent, intermediate goods by 14.9 per cent, consumer goods by 10.7 per cent and energy by 5 per cent.