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

Structure

The EU-27's industrial economy covers: 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 2018, this sector accounted for 85 % of industrial value added and for 90 % of industrial employment in the EU-27.

In 2018, Germany had the highest share of EU-27 value added for the manufacturing sector (33.4 %), for water supply, sewerage, waste management and remediation activities (29.8 %) and for electricity, gas, steam and air conditioning supply (26.2 %). By contrast, Denmark contributed the largest share of value added to the EU-27's mining and quarrying sector (22.5 %).

Germany also recorded the highest shares of EU-27 employment for the same three industrial activities as noted above, with shares of 27.2 %, 19.1 % and 28.9 % respectively. Poland had the largest employment share within the EU-27's mining and quarrying sector, at 36.4 %.

In 2018, measured by value added the six largest activities (based on NACE divisions) within the EU-27's industrial economy were: the manufacture of machinery and equipment not elsewhere classified (10.0 % of industrial value added); electricity, gas, steam and air conditioning supply (9.3 %); the manufacture of motor vehicles, trailers and semi-trailers (9.0 %), the manufacture of food products (7.9 %), the manufacture of fabricated metal products, except machinery and equipment (7.8 %); and the manufacture of chemicals and chemical products (at least 5.6 %; excluding the share for Ireland).

Among the EU Member States, Germany had the highest share of its industrial value added within the manufacture of machinery and equipment (14.7 %). For electricity, gas, steam and air conditioning, Bulgaria (17.2 %) had the highest proportion, while for the manufacture of motor vehicles, trailers and semi-trailers, the highest share was recorded in Slovakia (20.5 %).

In Cyprus, the manufacture of food products accounted for 22.5 % of industrial value added in 2018. In Slovenia, the manufacture of fabricated metal products except machinery and equipment accounted for 12.5 % of industrial value added. Belgium had the highest degree of relative specialisation across the EU Member States for the manufacture of chemicals and chemical products, with 12.6 % of its industrial value added being generated in this subsector.

In 2018, average personnel costs across the four sections within the EU-27's industrial economy ranged from a high of EUR 60.1 thousand per employee for electricity, gas, steam and air conditioning supply down to EUR 36.0 thousand 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 2018 were Denmark, the Netherlands and Poland (incomplete data for 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.

Developments

The industrial production index is an important indicator for monitoring the business cycle; it is a volume index that reflects real changes in industrial output.

Industrial output in the EU-27 contracted sharply in 2008 and 2009 as a result of the recession associated with the global financial and economic crisis. Output declined by 1.7 % in 2008 (compared with a year before) and by as much as 14.3 % in 2009; after two years of recovery there were also modest decreases in 2012 and 2013 before industrial output in the EU-27 resumed its upward trajectory. Having grown for five consecutive years, there was a 0.8 % decline for the EU-27's industrial production index in 2019, followed by a decline of 8.0 % in 2020 reflecting the impact of the COVID-19 pandemic. This most recent decline was driven by falling output for all types of manufacturing, most notably for capital goods (-12.9 % in 2020).

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

EU-27 industrial production was at a similar level in 2020 as in 2005, down just 0.2 % overall. The highest growth rates among the EU Member States during this period were recorded in Poland and Slovakia (both up 91.3 % overall), followed by Romania (up 64.6 %).

A total of 12 EU Member States recorded lower levels of industrial production in 2020 than in 2005. The largest contractions during this period were in Spain (-25.2 %), followed by Italy (-24.1 %), Luxembourg (-22.5 %), Greece (-21.9 %) and Portugal (-21.7 %).

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 different 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-27 rose at a relatively subdued pace between 2005 and 2020. The overall change in prices during this period was an increase of 17.1 %. They increased in all but two of the EU Member States: the highest industrial producer price increases were recorded in Romania (up 70.9 % overall), Latvia (65.9 %) and Bulgaria (57.7 %). The two decreases were recorded in Slovakia (-1.4 %) and Ireland (- 10.1 %)

In 2019, 25 % the EU-27's sold production of high-tech products was made-up of pharmaceuticals, while electronics and telecommunications (22.7 %) also contributed a relatively high proportion. Scientific instruments (17.6 %) and aerospace (14.8 %) 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-27.

High-tech products are often characterised by relatively high levels of international trade. Among the nine different categories of high-tech products shown, by far the highest level of trade in 2019 was for electronics and telecommunications, with a combined value for exports and imports of EUR 216.6 billion; aerospace (EUR 143.2 billion) and pharmaceuticals (EUR 138.2 billion) also had relatively high levels of total trade.

The EU-27 ran a trade surplus for most categories of high-tech products in 2019. The largest surpluses were recorded for pharmaceuticals (where exports exceeded imports by EUR 45.2 billion), aerospace (EUR 35.8 billion) and scientific instruments (EUR 23.3 billion). By contrast, the EU-27 had sizeable trade deficits for electronics and telecommunications (EUR 55.6 billion) and for computers and office machinery (EUR 35.3 billion).

Impact of COVID-19 pandemic

During the early months of the COVID-19 pandemic in spring 2020, virtually all EU Member States implemented containment measures.
For industry, these often included restrictions linked to social distancing requirements on the operation of factories.

The largest month-on-month decreases in EU-27 industrial output during the first wave of the pandemic were registered in March 2020 (down 10.5 %) and April 2020 (down 18.4 %). These decreases were followed by a rebound in activity, with output increasing in May 2020 (up 11.6 %) and June 2020 (up 9.6 %), while there were smaller monthly increases through to November 2020, followed by a small fall in December 2020 (down 1.2 %).