The dynamic economic recovery in industry and manufacturing continues and some signs of a stabilisation are now also visible in construction industry.
Recent declines in business confidence, though, confirm that the pace of industrial recovery is now "normalising" despite continued dynamic growth in exports. Fiscal retrenchment in countries with large deficits and debt and rising oil and other input prices also seem to have begun to affect the dynamics of the recovery.
In March industrial output continued its upward trend and was some 13% higher than at the time of the trough in early 2009. However, it was still some 8% below its former peak in early 2008. The three months data to March 2011 show that production continues to recover in the majority of sectors, often driven especially by export demand. The highest increases in output have been registered in capital and intermediate products such as motor vehicles, engineering and metals, whilst the recovery in other consumer goods has clearly lagged behind. However, only the wearing apparel and tobacco sectors still register declines on a year ago. Construction output registered a third consecutive month-on-month increase in seasonally adjusted output in March and the overall trend indicates a clear stabilisation, whilst industry expectations hint at a further but limited recovery in 2011. Recent data and forecasts for services, including tourism, remain positive. However, the recovery in output of business services is rather moderate and increasing energy prices might negatively affect the growth in tourism sector.
Extra-EU exports have already exceeded their former peak and continue to expand at a rather stable rate. 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. However, confidence among consumers increased substantially in May reflecting a improving situation on the labour market and more optimism about the future.
Data on the fourth quarter of 2010 confirm that employment in manufacturing has stabilised. Since the cyclical peak in 2008, manufacturing jobs have contracted by some 11.4%. Whilst the recovery of industrial output has stabilised employment, 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. While on average output is still substantially below its pre-crisis level, in some countries, such as Belgium, Estonia and Ireland (sic!) it is already above or even well above (Poland, Slovakia) pre-crisis levels.