Impact of Covid-19 crisis on industrial production
Data from September 2021
Planned update of the article: March 2022
Industrial production in the EU increased by 1.4% in July 2021 compared with the month before; the total production level is now 1% above the level of February 2020, the month immediately before the Covid-19 crisis.
Between July 2020 and July 2021, the production of pharmaceuticals increased by more than 30%, total industrial production increased by 8.3%.
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 15 September 2021.
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, cancellations 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 relaxed the measures during the Christmas season. But in many countries containment measures were relatively strict in the early months of the year 2021. Since March 2021, many measures have gradually been lifted. In general, the strictness, length, and nature of the Covid-19 measures in the EU are relatively heterogeneous.
Recent development of industrial production
In July 2021, industrial production in the EU increased by 1.4 % compared with the previous month; in the euro-area industrial production increased by 1.5 %. The increase in the EU in July followed a stagnation in June and a decrease of 0.9 % in May. Despite the relatively modest growth rates in the first months of 2021 and the occasional decreases (in February and May), the July 2021 industrial production stands at a level of 101.0 % 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.
In the EU, the production of non-durable consumer goods (e.g. food and clothing) grew by 2.8 % in July 2021 compared with the months before, the production of capital goods increased by 2.4 % and the production of intermediate goods by 0.5 %. The production of durable consumer goods (e.g. transport equipment, computers) fell by 0.2 %, the production of energy stagnated.
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.
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.
Development by industry
Figure 4 provides an overview of the development of the various industries between July 2020 and July 2021; within this year there occurred massive changes in the relative significance of the various industries. The recent July rates are not as exceptional as the annual rates for the earlier months of 2021 since the most dramatic effects of the Covid-19 crisis occurred in the months March to June (see Figure 1). The production of pharmaceuticals increased by 30.4 % between July 2020 and July 2021. Total industrial production increased by 8.3 % during this time. Most industries saw at least some growth since last summer. The exceptions are the mining of metal ores (-9.9 %), the production of motor vehicles and trailers (-9.0 %), and the manufacturing of clothes (-4.6 %).
Most industries have regained their pre-crisis level of February 2020, some are even considerably higher. Industries that have clearly surpassed the pre-crisis level of February 2020 are for example computers and related products, beverages, and pharmaceuticals. Industries with a level of production below that of February 2020 are for example motor vehicles and other transport equipment, and printing and reproduction of media.
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 July 2021 (ongoing recovery) and the recent monthly rates for July 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 %, in Finland industrial production remained at least stable. The majority of countries, however, experienced rates of change of around -25 %.
The overall growth since last summer 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).
Eighteen EU-countries (Ireland, Belgium, Lithuania, Poland, Greece, Latvia, Austria, Sweden, the Netherlands, Denmark, Croatia, Finland, Hungary, Slovakia, Italy, Czechia, Bulgaria, and Slovenia) have regained or surpassed the pre-crisis production level. Industrial production in Ireland is even one third higher than before the crisis.
Several other countries are already rather close to the 100 %-mark (Spain, Estonia, Luxembourg). In Germany industrial production has so far only reached 93.7 % of the pre-crisis level.
Table 2 also shows that the recovery in the EU has been relatively strong for durable consumer goods (106.4 %) and for non-durable consumer goods (104.4 %). The production of intermediate goods has also surpassed the pre-crisis level (102.5 %). The recovery levels for energy (99.4 %) and capital goods (98.7 %) have, in recent months, lost some of the earlier recovery again.
Source data for tables and graphs
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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