Industry Download chapter 3 of Key figures on European business in PDF format

Structure

The EU’s industrial economy is covered by four activities: mining and quarrying; manufacturing; electricity, gas, steam and air conditioning supply; and water supply, sewerage, waste management and remediation activities. Manufacturing was by far the largest of these four activities: in 2019, it accounted for more than four fifths (84.7 %) of industrial value added in the EU and for an even higher share of industrial employment (90.3 %).

In 2019, Germany had the highest share of EU value added for the manufacturing sector (33.0 %), for water supply, sewerage, waste management and remediation activities (30.6 %) and for electricity, gas, steam and air conditioning supply (26.2 %). By contrast, Poland contributed the largest share of value added to the EU’s mining and quarrying sector (22.8 %), followed by the Netherlands (14.7 %).

Germany also recorded the highest shares of EU employment for the same three industrial activities as noted above, with shares of 27.3 %, 19.6 % and 29.8 % respectively. Poland had the largest employment share within the EU’s mining and quarrying sector, at 38.1 %.

In 2019, average personnel costs across the four sections within the EU’s industrial economy ranged from a high of €60 700 per employee for electricity, gas, steam and air conditioning supply down to €36 500 per employee for water supply, sewerage, waste management and remediation activities.

In the vast majority of EU Member States, the highest average personnel costs across industrial activities were registered for electricity, gas, steam and air conditioning supply. The only exceptions in 2019 were Denmark, the Netherlands and Poland (incomplete data for Cyprus and Malta): in all three cases, average personnel costs were higher for mining and quarrying. By contrast, the lowest average personnel costs were often recorded for water supply, sewerage, waste management and remediation activities; Estonia, Greece, Croatia and Portugal were exceptions, as average personnel costs were lower in manufacturing.

Developments

The industrial production index is an important indicator to monitor the business cycle; it is a volume index that reflects real changes (after removing the impact of price changes) in industrial output.

Industrial output in the EU contracted in 2008 and 2009 as a result of the recession associated with the global financial and economic crisis. Output declined 1.6 % in 2008 (compared with a year before) and was down as much as 14.4 % in 2009; after two years of recovery, there were also decreases in 2012 and 2013 before industrial output in the EU resumed its upward trajectory. Having grown for five consecutive years, there was a 0.5 % decline for the EU’s industrial production index in 2019, followed by a considerable contraction in 2020 (down 7.4 %); this most recent decline was driven by falling output for all types of manufacturing, most notably for capital goods (down 11.8 % in 2020), reflecting the impact of the COVID-19 pandemic. Industrial output rebounded in 2021, recording growth of 8.1 %, bringing the index level back to approximately the same level it had been in 2019.

When considering the information shown in the figures in the subchapter Developments it should be remembered that the period covered (2005–2021) includes the global financial and economic crisis and subsequent recovery. Furthermore, by ending in 2021, the overall rates of change reflect the combination of the long-term developments and the often substantial (downward) impact of the COVID-19 pandemic in 2020 and rebound in 2021.

EU industrial production was 9.1 % higher in 2021 than it had been in 2005. The highest growth rates among the EU Member States during this period were recorded in Ireland, Poland and Slovakia, all of which had a level of industrial output in 2021 that was more than double its 2005 level.

A total of nine EU Member States recorded lower levels of industrial production in 2021 than in 2005. The largest contractions during this period were in Spain (–19.6 %), Portugal (–18.9 %), Luxembourg (–16.5 %), Italy (–14.7 %), Greece (–13.8 %) and France (–11.1 %).

The industrial producer price index is based on selling prices reported by a sample of producers across the EU. This indicator is used to monitor price developments at various stages of industrial processes; changes in producer prices can be an early indicator of inflationary pressures within an economy.

Industrial producer prices in the EU rose at a relatively subdued pace between 2005 and 2021. The overall change in prices during this period was an increase of 28.6 %. Industrial producer prices increased in all but one of the EU Member States. The highest increases were recorded in Romania (up 96.3 % overall), Latvia (87.6 %) and Bulgaria (81.9 %). The only exception was Ireland, where prices fell 10.9 %.

In 2020, 31.3 % of the EU’s sold production of high-tech products was made-up of pharmaceuticals, while electronics and telecommunications (21.5 %) also contributed a relatively high proportion. Scientific instruments (17.7 %) and aerospace (11.7 %) were the only other categories to record double-digit shares. At the other end of the range, armaments accounted for just 1.1 % of the sold production of high-tech products in the EU.

High-tech products are often characterised by relatively high levels of international trade. Among the nine categories of high-tech products shown, by far the highest level of trade in 2021 was for electronics and telecommunications, with a combined value for exports and imports of €233 billion; pharmaceuticals (€187 billion) also had a relatively high level of total trade.

Overall, the EU ran a small trade surplus for high-tech products in 2021. The largest surpluses were recorded for pharmaceuticals (where exports exceeded imports by €67 billion), scientific instruments (€21 billion) and aerospace (€20 billion). By contrast, the EU had sizeable trade deficits for electronics and telecommunications (€71 billion) and for computers and office machinery (€50 billion).

Latest developments

Monthly data for 2020 and to a lesser extent 2021 show the impact of the COVID-19 pandemic on the industrial economy. The most recent data for 2022 may be impacted by a wider range of issues, for example aftereffects of the COVID-19 crisis on supply chains and early impacts from the Russian military aggression against Ukraine and the related sanctions.

The largest month-on-month decreases in EU industrial output during the first wave of the pandemic were registered in March 2020 (down 10.2 %) and April 2020 (down 18.5 %). These decreases were followed by a rebound in activity, with output increasing in May, June and July 2020, up 12.3 %, 10.0 % and 3.7 % respectively. Since then, monthly rates of change have ranged from –1.8 % to 3.3 %.