European Commission - Enterprise and Industry

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The Economic Recovery in Industry - monthly note July 2011 Published on: 13/07/2011

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DG Enterprise and Industry/Unit B2.

The recovery in manufacturing output continues, but at a more moderate pace than in the previous months.

Recent declines in business confidence indicate that the pace of industrial recovery is normalising. The Japanese earthquake has also had some temporary impact on output and exports in some sectors, notably autos.  Some signs of a stabilisation in construction output are now visible. However, rising energy and other input prices, fiscal retrenchment in some countries, and continued limitations on access to finance are negatively affecting the dynamics of the recovery.

In the three months to April, manufacturing production was 7.4% higher than a year ago. Manufacturing output is now some 15% higher than its trough in early 2009, but is still some 8% below its peak in early 2008. Production continues to recover in the vast majority of sectors, mainly driven by exports. The highest increases in output have been in capital and intermediate products such as metals, non-metallic minerals and motor vehicles, but also increases are visible in consumer goods such as leather and tobacco products that were in decline not so long ago. There has been a stabilisation in labour markets and a recovery in consumer demand. Construction output has now stabilised, although the limited recovery has mainly occurred in civil engineering rather than building construction. 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 affect the growth in tourism sector.

Extra-EU exports are still above their former peak despite a small contraction in April. Growth in intra-EU trade, internal demand and private consumption is in contrast less dynamic and lags behind, reflecting slower overall output growth in Europe as compared to the rest of the world.

Data on the first quarter of 2011 confirm that employment in manufacturing has stabilised. Since the cyclical peak in 2008, manufacturing jobs have contracted by some 11%. The unemployment rate remains at a high level, but some improvements are now also visible.

Looking at the situation in the Member States, substantial differences are evident, 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 Poland, Belgium, Estonia and Slovakia it is already well above pre-crisis levels.

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