Economic recovery in the industry Arna fhoilsiú an : 18/05/2011
- DG Enterprise and Industry/Unit B2.
The dynamic economic recovery in industry and manufacturing continues, while construction industry still remains in decline. However, the recent (modest) declines in business and consumer confidence could serve as first indications both that the pace of industrial recovery normalises somewhat, and that the fiscal retrenchment in countries with excessive deficits and debts leaves its first skid marks in the dynamics of the recovery. First signals indicating that the decline in construction output may eventually bottom out remain rather fragile.
In February industrial output continued its upward trend and was some 15% higher than at the time of the trough in early 2009. However, it was still almost 8% below its former peak in early 2008. The three months data to February 2011 show that production continues to recover in the majority of sectors. A robust recovery has taken place especially in the sectors producing capital goods and motor vehicles industries. In contrast, tobacco products, wearing apparel, and coke and refined petroleum products have registered the biggest declines in recent months. Construction output is still around its trough despite a small month-on-month increase in seasonally adjusted output in February. Still, the overall trend adjusted construction output in February continued to decline and was about 20% below its cyclical peak in January 2008. In contrast, data and forecasts for services, including tourism, remain positive. However, the recovery in output of business services is rather moderate.
Extra-EU exports have strongly recovered and oscillate now around the levels of their former peak. Growth in intra-EU trade, internal demand and private consumption in contrast is less dynamic and lags behind, reflecting less dynamic overall output growth in Europe as compared to the rest of the world.
Data on the fourth quarter of 2010 confirm that employment in manufacturing has been stabilising. Since the cyclical peak in 2008, manufacturing jobs have contracted by some 11.4%, broadly the same size as the current fall in output. The recovery of industrial output allowed for short-term working being largely phased out in industry, but the unemployment rate remains at a high level.
Looking at the situation in the Member States, substantial differences can still be noticed, even if the recovery is now visible in the vast majority of countries. There are an increasing number of countries where annual output growth in industry has exceeded 10%, with Estonia, Sweden, Lithuania and Germany in the lead. In contrast, Greece continues to experience a reduction of output, whereas Portugal and Spain so far only see a bottoming out of output contraction. Business and consumer confidence was especially dented in the UK, where contractive fiscal retrenchment is also very pronounced.