span>span>Wednesday 13th March 2024/span>span> - 10:31 (GMT)/span>/span>
Figures released by Eurostat have shown industrial production across the Euro Area experienced a significant downturn during January, plummeting by 3.2% compared to the previous month. This sharp contraction stands in stark contrast to December's upwardly revised 1.6% growth and fell far below market projections of a 1.5% decline. It marks the most severe drop since March of the previous year and ranks as the second-largest decline since the aftermath of the COVID-19 outbreak in April 2020.
The primary driver behind this contraction was a striking 14.5% decline in the production of capital goods, which represents the most substantial downturn in this sector since the early stages of the pandemic. Additionally, output also decreased for both durable goods (slipping by 1.2%, compared to a 1.0% increase in December) and non-durable consumer goods (experiencing a 0.3% decline, as opposed to a 2.2% drop in the previous month).
However, amid the gloomy figures, there were some signs of resilience. Production of intermediate goods recorded a notable increase of 2.6%, bouncing back from five consecutive months of stagnation or decline. Energy output also demonstrated growth, expanding by 0.5%, marking the fourth consecutive period of expansion.
The euro remained range-bound against most major currencies following the news and attentions now turn to EU policymakers who are speaking throughout the week. This downturn in industrial activity underscores the ongoing challenges facing the Euro Area economy and will place further pressure on the European Central Bank to begin cutting interest rates.
