The weakening trend of industrial production was slightly moderated by an increase of output registered in May. Overall trend-adjusted manufacturing output in May was some 2% lower than a year ago, while the industrial confidence in June remained broadly stable following a steep decline a month earlier. The ECFIN industrial confidence indicator is nonetheless well below its longer-term average. Similarly, the PMI confidence indicator points out to further contraction in the euro area even if at a slightly slower pace than in May. Uncertainties about the economic outlook and difficulties in access to finance continue to weigh down business confidence. Nevertheless, cost pressures on manufacturers have lessened a bit following lower inflation of commodities and energy prices. Construction output has fallen steeply in recent months, especially through a strong contraction in civil engineering (roads, bridges etc.).
Overall in the last three months to May 2012, manufacturing production was some 1.9% lower than a year ago and also some 0.3% below the level registered in the preceding three months. The situation varies across sectors, but few industries manage to continue their recovery. In the last three months to May 2012, the highest growth was registered in chemicals, other transport equipment, paper, pharmaceuticals, machinery and equipment, whilst the biggest declines in production occurred in furniture, other non-metallic products, wood and leather sectors. Manufacturing output is now 11% higher than its trough in early 2009 and some 9% below its former peak in early 2008. Recent data and forecasts for services, including tourism, remain positive, but their future performance will be affected by the general economic situation.
Expansion of international demand for EU products supports EU manufacturing production. Extra-EU exports have already exceeded their previous peak. In contrast, intra-EU trade, internal demand and private consumption continue to be subdued. The recovery in output growth in Europe has greatly lagged that in the rest of the world, particularly emerging Asia and Latin America.
Data on manufacturing employment in the first quarter of 2012 shows that the number of persons employed remained broadly stable compared to the previous quarter. However, compared to their cyclical peak in 2008 manufacturing jobs have shrunk by some 11%. The unemployment rate in industry stays at a record high level, but the situation varies greatly between countries. Weak employment expectations suggest little room for immediate improvement.