The economic outlook is very diverse across sectors and countries. Countries and industrial sectors where export activities are relatively important with respect to internal demand are pulling out of the crisis, while those supplying internal demand remain subdued. The overall industrial production trend for the EU remains relatively stable following an increase of output registered in July and a decline of similar magnitude a month earlier. The trend-adjusted manufacturing output in July was some 2% lower than a year ago. The industrial confidence in August registered a second consecutive steep decline bringing the ECFIN industrial confidence indicator well below its long-term average. Similarly, the PMI confidence indicator points out to further contraction in the euro area. The latest survey on investment suggests that entrepreneurs expect a slow growth of investments in 2012, despite the fact they are rather positive about the future demand and technical developments. 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 July 2012, manufacturing production was 2% lower than a year ago and some 0.2% above the level registered in the preceding three months. The situation varies across sectors, but only a few industries manage to continue their recovery. In the last three months to July 2012, the highest growth was registered in pharmaceuticals, other transport equipment, other manufacturing, and computer and electronics industries, whilst the biggest declines in production occurred in wood, other non-metallic products, rubber and plastic, and mechanical engineering sectors. Manufacturing output is now some 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 continues to support EU manufacturing production. Extra-EU exports have picked-up the pace and are growing at rate similar to this of the world trade. In contrast, intra-EU trade has been in decline for almost a year, reflecting subdued internal demand and private consumption. 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 second 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.