Eurozone Industry Slumped in July, Adding to Signs of Weakness -September 13, 2023 at 05:15 am

By Joshua Kirby

Eurozone industrial output fell more sharply than expected in July, a further sign of slowdown in the bloc ahead of Thursday’s key European Central Bank policy meeting.

Total production declined 1.1% in July compared with June, according to figures published Wednesday by European Union statistics agency Eurostat. This was a sharper decline than the 0.8% fall forecast by economists, according to a poll carried out by The Wall Street Journal.

Compared with the same month a year ago, July production was 2.2% lower, again a sharper fall than the 0.5% decrease predicted by economists.

In June, output rose 0.4% on month, a figure revised downward from a previous estimate of 0.5%.

Faltering output follows on the heels of moribund economic growth between April and June. Gross domestic product rose just 0.1% in the bloc in the quarter, according to revised figures published last week by Eurostat.

Demand was weak across eurozone industry and household consumption in July, the figures show. Production of capital goods, such as machinery, slumped 2.7% from June, while output of durable consumer goods fell 2.2%. Energy production, conversely, increased by 1.6%.

In line with wider trends among the eurozone’s major economies, Germany booked lower output by 1.6% in July, and Italian production also declined. In France and Spain, however, production was higher month-on-month.

The latest sign of economic weakness comes on the eve of the ECB’s next decision on interest rates. Bank policymakers will meet Thursday to decide whether to continue an unprecedented cycle of rate hikes, aimed at soothing rapid price rises by cooling demand.

The bank will also issue its latest forecasts for inflation and growth in the 20-member bloc, with many market observers expecting a more pessimistic outlook for the eurozone economy this year and next. The European Union this week revised down its own expectations for the bloc’s economy, now seeing growth of 0.8% this year and 1.3% next.

Write to Joshua Kirby at [email protected]; @joshualeokirby

(END) Dow Jones Newswires

09-13-23 0514ET