Impact of Covid-19 crisis on industrial production


Data from June 2021

Planned update of the article: September 2021

Highlights


Industrial production in the EU increased by 0.5% in April 2021 compared with one month before; the total production level is now slightly above (100.3%) the level of February 2020, the month immediately before the crisis.

Between April 2021 and April 2020, production of motor vehicles increased by more than 400%, production of leather products increased by more than 310%; this unusually high growth is due to the low levels of production in March and April 2020.

EU, development of industrial production, January 2020 to April 2021, monthly data, seasonally and calendar adjusted (2015=100) - Source: Eurostat (sts_inpr_m)

This article is part of an online publication presenting the development of short-term business statistics (STS) indicators in the Covid-19 crisis. The results presented in this article concern the development of the industrial production index. Eurostat will continue to update the information on the effects of the Covid-19 crisis on industrial production, construction, trade and services in the online publication. For the publication of new data see the STS release calendar. Please also see the monthly Eurostat News Release 14 June 2021.


Full article

Covid-19 containment measures in Europe

Covid-19 infections have been diagnosed in all European Union Member States. To fight the pandemic, EU Member States have taken a wide variety of measures, including restrictions on travel into the EU and between EU Member States, cancellation of public events, restrictions on private gatherings, closing of schools, bars, restaurants, hotels and many shops. The large majority of the prevention measures were taken during mid-March 2020. Most of the prevention measures and restrictions were kept throughout the whole of April. In May, several of the measures were abandoned, or at least reduced in scope and severity, which had a strong effect on industrial production. This recovery effect continued in June and to a lesser degree in July. With increasing Covid-19 cases after the summer holidays, several countries re-introduced some containment measures in September and October. The measures were further increased in November. In December, several countries loosened the measures during the Christmas season. But in many countries containment measures were relatively strict in the early months of the year and were only gradually rolled back.

Recent development of industrial production

In April 2021, industrial production in the EU increased by 0.5 % compared with the previous month; in the euro-area industrial production increased by 0.8 %. The EU April increase followed an increase of 0.8 % in March and a decrease of 1.0 % in February. After severe decreases in April (-19.3 %) and March 2020 (-10.2 %), industrial production strongly recovered in May 2020 (12.7 %), June (9.7 %), and July (4.7 %). Despite the more modest growth rates since August 2020, the total loss of industrial production due to the Covid-19 crisis has now been recovered; the April 2021 industrial production stands at a level of 100.3 % of what it had been in February 2020, i.e. just before the crisis.

Figure 1 shows the 2020 and 2021 development in industrial production for total industry and the various main industrial groupings, i.e. intermediate goods, capital goods, energy, durable and non-durable consumer goods.

Figure 1: EU, development of industrial production, January 2020 to April 2021, monthly data, seasonally and calendar adjusted (2015=100) - Source: Eurostat (sts_inpr_m)

In the EU, the production of energy and also of durable consumer goods (e.g. transport equipment, computers) increased by 2.9 % in April 2021 compared with the month before. The production of capital goods (e.g. machinery) grew by 0.8 %, the production of intermediate goods (e.g. raw materials) by 0.5 %. The only industry section that experienced a fall in April 2021 was non-durable consumer goods (e.g. food, clothing) which went down by 0.7 % (this industry had however seen a comparatively strong increase of 2.1 % in March).

For comparison, Figure 2 shows how the various industrial groupings developed on average during the years 2010 – 2019 (to make the various index levels comparable, all years have been re-referenced to an average of 100). With the exception of energy production, all MIGs see an increase between January and May and some decline in June due to the beginning of the summer holidays, the months with the strongest growth usually being March and May. During the rest of the year the production levels remain relatively stable. As can be seen, the average changes in the index value are clearly below one point.

Figure 2: EU, average monthly development of industrial production, 2010 - 2019, monthly data, seasonally adjusted (2015=100).
Source: Eurostat (sts_inpr_m)

Comparison with 2008

The global financial crisis in 2008 had quite a strong effect on the production in industry and construction (for a detailed analysis of the 2008 crisis on STS indicators see here).

Within only one year, between April 2008 and April 2009, the production of intermediate goods fell by almost 31 index points, the production of capital goods fell by almost 28 index points and the production of durable consumer goods by around one quarter. Energy production declined by around 16 index points and the production of non-durable consumer goods dropped by around 4 index points. In total, industrial production was reduced by more than 22 index points in these 12 months.

In comparison with the global financial crisis, the Covid-19 crisis affected the various industry groups in a much more drastic and severe way: within only two months, between February and April 2020, the index for total industrial production dropped by almost 29 points, the index for durable consumer goods was halved, the index for capital goods dropped by more than 40 points. The declines in the early months of the pandemic are by far the largest monthly falls recorded since the start of the series, significantly higher than the losses seen in late 2008 and early 2009 months, during the financial crisis. Overall, industrial production in the euro area and EU fell in April 2020 to a level that it had already reached in the 1990s.

Figure 3: EU, development of industrial production during the global financial crisis 2008-2009, monthly data, seasonally adjusted (2015=100).
Source: Eurostat (sts_inpr_m)

Development by industry

Figure 4 provides an overview of the development of the various industries between April 2020 and April 2021; within this year there occurred massive changes in the relative significance of the various industries. March 2020 had been the first month for which production figures had been considerably reduced due to the crisis. In the following month, the negative effects of the Covid crisis on industrial production had even been worse. The current year-on-year figures describe the recovery made since then (note that unlike the other data in this article, these rates of change are based on calendar adjusted data).

The production of motor vehicles and trailers increased by 405.3 % since last April, the production of leather and related products increased by 310.9 %. These unusually high rates are the consequence of the severe reduction in production that had occurred in the first months of the crisis, which sent production in these industries to historical low levels. Despite these rates, the pre-crisis production levels have not yet been regained (see below).

Other industries that show very high year-on-year growth rates are furniture (118.4 %) and wearing apparel (100.6 %). At the other end of the spectrum are the extraction of crude petroleum and natural gas (-4.2 %), the mining of metal ores (-1.9 %), and tobacco products (-0.8 %).

Figure 4: EU, growth rates for different industries – April 2021 compared with April 2020, monthly data, calendar adjusted (2015=100).
Source: Eurostat (sts_inpr_m)

Most industries have regained their pre-crisis level of February 2020, some are even considerably higher (e.g. for computer and related products the production in April 2021 was 62.1 % higher than in February 2020). Some industries still need further growth to catch up to the pre-crisis levels (e.g. wearing apparel, leather and related products, motor vehicles).

Development by country

Since the Covid-19 containment measures differed between countries as to timing and strictness, it was to be expected that the effects on industrial production would also vary. Table 1 shows the rates of change between February and April 2020 (peak of the crisis), April 2020 and April 2021 (recovery) and the recent monthly rates for April 2021. During the peak months of the crisis, Italy, Slovakia, Cyprus and Hungary experienced extremely high negative rates of change. These countries also showed high rates during the recovery months since May 2020. In some other countries the crisis seemed to have little or no effect on industrial production. Between February 2020 and April 2020, production grew in Ireland by 6.4 % and in Finland by 0.2 %. The majority of countries, however, experienced rates of change of around -25 %.

Table 1: Industrial production growth rates for total industry 2020, 2021, monthly data, seasonally adjusted.
Source: Eurostat (sts_inpr_m)

The overall growth since May 2020 has been, for several countries, sufficient to recover most losses during the most acute phase of the Covid-19 crisis. Table 2 shows the degree of recovery for the EU countries and the various main industrial groupings (MIGs). Sixteen EU-countries (Ireland, Greece, Lithuania, Austria, Belgium, Poland, Latvia, Croatia, Romania, Sweden, Finland, Czechia, Bulgaria, Italy, Slovenia and Hungary) have regained or surpassed the pre-crisis production level. Industrial production in Ireland is even 37.0 % higher than before the crisis.

Several other countries are already rather close to the 100 %-mark (Denmark, Spain and the Netherlands) while Germany, Malta and France are still more than 5 % away from the pre-crisis production level.

Table 2 also shows that the recovery in the EU has been relatively strong for durable consumer goods (104.8 %) and for energy (102.6 %). The production of intermediate goods has also surpassed the pre-crisis level (101.9 %). The recovery levels for capital (99.9 %) and non-durable consumer goods (98.0 %) are getting closer to the pre-crisis situation.

Table 2: Industrial production, share of April 2021 production in % of February 2020 production, monthly data, seasonally adjusted.
Source: Eurostat (sts_inpr_m)



Data sources

The latest results for the development of industrial production are published in monthly news releases by Eurostat.

According to the EBS-Regulation and the EBS-Implementing Regulation the industrial production index is published only 45 days after its reference months. At this early stage it is normal that no complete coverage of data can be ensured by National Statistical Institutes and that data have to be estimated to some degree. As a consequence, revisions occur during the publications that follow.

The Covid-19 crisis posed additional problems for data collections, since, for example, closed shops and production sites could not be reached or did not supply any data. Moreover, it was not clear if missing data might not be due to businesses being permanently closed. As a consequence, it may be expected that revisions of the first data could be subject to greater revisions than is usually the case.

The data in this article are, for several Member States, based on fewer statistical observations than usual or alternative sources. For missing data, imputation and estimation methods were applied. Information on the compilation of short-term business statistics during the Covid-19 crisis can be found here and (specifically for STS) here.

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