Long term developments in industrial production - results from short-term statistics


Data extracted in May 2021

Next update: July 2025

Highlights


Between 2000 and 2020 industrial production increased by an average rate of 0.3% per year. The low average growth was due to the economic and financial crisis (average annual rate of change -8.2% in 2008 and 2009) and the recent Covid-19 crisis (-8.0% in 2020).

European industries developed in very different ways between 2000 and 2020. The production of wearing apparel decreased by an average rate of 6.6% per year, the production of pharmaceutical products increased by an average annual rate of 4.5%.

Manufacturing, fastest declining and growing industries, EU, 2000-2020 monthly data, calendar and seasonally adjusted, 2000 = 100
Source: Eurostat (sts_inpr_m)



Full article


Overview

This article describes the development of industrial production and in particular the evolution of manufacturing in the EU, the euro area and the EU Member States since the year 2000 on the basis of short-term business statistics. The analysis is based on the current composition of the EU, covering 27 Member States.

The main purpose of short-term business statistics (or simply short-term statistics, STS) is to describe the most recent changes in the activities of European businesses in industry, construction, trade, and services in order to help policy makers to plan, monitor, and assess their fiscal and monetary policies. However, STS provide time series of major economic aggregates (e.g. production, turnover, prices, employment) which often go back to the year 2000 (and sometimes even beyond that). Therefore, the data can also be used to analyse long-term trends in European economies.

Industry, in this article, refers to economic activities in NACE sections B (mining and quarrying), C (manufacturing), and D (electricity, gas, steam, air conditioning supply). Note that water supply and waste management, which are grouped together in NACE section E, are not included in the industry and energy definitions used in this article. These latter activities account for around 4 % of the sum of activities in a more comprehensive definition of industries, i.e. NACE sections B, C, D, and E (Table 1). Unfortunately, the coverage of industry section E in STS is not sufficient for a detailed analysis. Manufacturing accounts for around 85 % of total industry (B, C, D, E), and the emphasis of this article will therefore be on manufacturing activities.

Table 1: Share of different industries in total industrial value added, EU, 2018
Source: Eurostat (sbs_na_ind_r2)

Since the emphasis of STS is on the changes in the economy, STS provides indices and growth rates but not data in absolute values. In order to show the long-term trends most clearly, all indices in this article have been re-referenced to the year 2000 (2000 = 100). Note however that the indices are calculated with weights from the base year 2015, i.e. the relative significance of the various industries is based on the situation in 2015. (For more on basing and referencing indices see here.)

This article does not discuss in detail the effects of the Covid-19 epidemic on industrial production since there is a special article on that particular subject.


General trends in industrial production 2000 – 2020

Figure 1 shows the evolution of the three NACE sections mining and quarrying, manufacturing, and energy (i.e. electricity, gas, steam and air conditioning supply) that compose total industry.

Figure 1: Production in total industry and main industry sections, EU, 2000-2020 Monthly data, calendar and seasonally adjusted, 2000=100
Source: Eurostat (sts_inpr_m)

As Figure 1 shows, the production of energy (electricity, gas, steam and air conditioning supply) stagnated over the long term (the average annual growth rate was 0.1 %). Moreover, this energy related production was less affected by the financial and economic crisis than other industries (-2.4 % annual reduction in 2008 and 2009).

Mining and quarrying activities also more or less stagnated in the early years of the 2000s (average rate of change -0.2 % between 2000 and 2007). During the financial and economic crisis these activities declined by 7.4 %, since 2010 the average annual rate of decline was 4.7 %. In total, the index of mining and quarrying decreased from 100.9 percentage points in January 2000 to 51.3 points in December 2020, i.e. the size of these activities was effectively halved over the last two decades.

European manufacturing increased rather dynamically in the years immediately preceding the financial and economic crisis of 2008 and 2009. During the crisis, manufacturing dropped by almost 9.0 % per year, but it recovered relatively quickly in the years 2010, 2011 and 2012 – however without quite regaining the pre-crisis level which was only reached in 2018. During the Covid-19 crisis in 2020, production levels fell much more than in 2008/2009; recovery was however also more dynamic (for more details on how the Covid-19 crisis affected industrial production click here; for an analysis of the effect of the financial crisis on EU-Member states see below).

Figure 2 shows the evolution of the industrial production index since the year 2000 together with the evolution of the main industrial groupings (MIGs). MIGs combine different industries with common characteristics into specific aggregates. The MIGs are intermediate goods (e.g. raw materials), energy (e.g. mining activities, electricity, gas, and steam), capital goods (e.g. machinery, motor vehicles), durable consumer goods (e.g. consumer appliances, furniture), and non-durable consumer goods (e.g. food, clothing).

All indices show roughly the same general development pattern since they all clearly reflect the economic and financial crisis in 2008/2009. There are, however, marked differences in the long-term trends. Between January 2000 and February 2020 (before the effects of the Covid-19 crisis were felt) the index for capital goods increased by about one third while the index for energy dropped by around 9 index points and the index for durable consumer goods even fell by 10 points. At the same time, the index for total industry increased by more than 17 points.

Figure 2: Production in Main Industrial Groupings (MIGs), EU, 2000-2020 monthly data, calendar and seasonally adjusted, 2000=100
Source: Eurostat (sts_inpr_m)

Although they combine industries that share important characteristics, the main industrial groupings also hide differences between the developments of the specific industries of which they are composed. Figure 3, therefore, presents the industries (at NACE rev. 2 division level) with the strongest positive and the strongest negative trends. The most dynamic development by far can be noted in the pharmaceutical industry; the monthly index level increased by more than 150 points, meaning that the production in this industry more than doubled over the period 2000-2020. A very strong increase was also recorded for the manufacturing of computers, electronic and optical goods, which increased by more than 90 points. The monthly production levels for tobacco, on the other hand, declined by more than 50 points, i.e. the production was more than halved between 2000 and 2020.

Figure 3: Manufacturing, fastest declining and growing industries, EU, 2000-2020 monthly data, calendar and seasonally adjusted, 2000 = 100
Source: Eurostat (sts_inpr_m)

When looking at specific industries, the development of the pharmaceutical industry and the tobacco industry differs most significantly from the evolution of total industry. However, there are also some other industries that develop either more dynamically than total industry or which are in general decline. Table 2 is based on the average annual rates of change for the industries in all countries for the years 2000 – 2020. It shows, for the European Union, the euro area and the individual Member States, those industries that in this period had the highest growth rates (first, second and third) as well as those industries that had the lowest average rates of growth or even rates of decline.

Table 2: Strongest and weakest growth industries, 2000 - 2020
Source: Eurostat, special calculations (sts_inpr_a)

Table 2 confirms the dynamic growth of the pharmaceutical industry in the EU, which is also visible in the country results. This activity appears for ten Member States (for which data are available) as one of the three fastest growing industries. Other industries that are regularly among the most dynamic industries at county level are electrical equipment, motor vehicles, machinery, and computers and electric and optical equipment.

At the other end of the spectrum are the industries that declined during the last twenty years. Apart from tobacco products, industries that have considerably lost importance are the production of wearing apparel (mentioned for eleven Member States in the list of fastest declining industries) and leather products (also mentioned for eleven Member States). Also on the decline are the various sub-sectors of mining and quarrying (mining of coal and lignite, extraction of petroleum and gas, mining of metal ores). Note however, that in Finland and Sweden these industries show high growth; this is partly due to the fact that for several industries, such as pharmaceuticals, data are confidential for these countries and could therefore not be used in this analysis.

It should be noted that the analysis of the fastest growing and declining industries cannot be based on all EU Member States. For Ireland, manufacturing data are mostly confidential since 2010. Moreover, because of their relatively low weight in the EU-aggregates, Croatia, Cyprus, Luxembourg, Malta, Slovenia and Slovakia are not required to transmit data that are sufficiently detailed for this type of analysis.

While the industries mentioned above show a trend that is rather different from manufacturing as a whole, it is interesting to observe that the production of rubber and plastic is very similar to the development of total manufacturing although this industry only makes up 4.2 % of the total EU production value (according to 2018 data from structural business statistics). The graphs for total manufacturing and for the manufacturing of rubber and plastic products are difficult to distinguish in Figure 2 and are therefore presented again in Figure 4 with a different axis formatting. This close development between total manufacturing and the production of plastic and rubber products can of course not be observed in every single Member State, but it is relatively pronounced in e.g. Germany, France and the Netherlands.

Figure 4: Total manufacturing, rubber and plastic production, EU, 2000-2020 monthly data, calendar and seasonally adjusted, 2000 = 100
Source: Eurostat (sts_inpr_m)

Before and after the financial and economic crisis

Between 2000 and 2007, industrial production in the EU increased by an average annual rate of 2.0 %, manufacturing increased on average by 2.1 % per year. In 2008, and in particular in 2009, industrial production dropped significantly (-8.2 %). In the following years, industrial production recovered, but it decreased again in 2012 and 2013. Since 2014, industrial production was again on an upward trend but not to the extent of its dynamic development of the pre-crisis years. In 2020, the Covid-19 crisis hd a strong negative effect on industrial production.

Table 3 summarises the average annual growth rates for all industries in the EU for the period 2000-2020, for the years before, during and after the financial and economic crisis in 2008 and 2009, and also reports the 2020 rates of change which were strongly influenced by the Covid-19 crisis.

Table 3: EU, Industries annual growth rates during different periods
Source: Eurostat, special calculations (sts_inpr_a)

The rates in Table 3 suggest that the economic and financial crisis did not only lead to a massive reduction in industrial production at the time (2008/2009), but that afterwards the economic development was also less dynamic than it had been before. To give an idea of the magnitude of these effects, Figure 5 shows the actual development of industrial production as well as the trend of production based on the average rate of change in the years 2000 – 2007, i.e. assuming that the growth rates of the years 2000-2007 had continued until the year 2020. The graph shows that under this assumption, the level of production in the EU would have reached almost 160 index points at the end of 2020, which is around 40 % higher than the index level that was actually reached by that time (around 113 index points). Note that this simulation is of course entirely hypothetical; even without the financial and economic crisis there might not have been a continuation of the 2000-2007 trend for other reasons.

Figure 5: Total industry, actual development and prolongation of the trend, EU 2000-2007, monthly data, calendar and seasonally adjusted, 2000=100
Source: Eurostat (sts_inpr_m)

This simulation shows quite different results for different industries. The largest difference between the actual development and the projection of the 2000-2007 trend for the index at February 2020 (before the Covid-19 crisis) can be found for the production of basic metals (67 % difference), for printing and reproduction of recorded media (63 % difference) and for manufacturing of machinery and equipment (61 % difference).

The production of leather products, of wearing apparel and of textiles present almost exactly the opposite development. These three industries were already declining in the years before the financial and economic crisis and while their output also dropped during the crisis itself, their decline was not very pronounced afterwards. Had the decline of leather production continued at the 2000-2007 trend, its production level would have been 41 % lower in February 2020 than it actually was. For wearing apparel the difference is 26 %, for textiles 8 %.

Figure 6: Manufacturing industries, EU percentage difference between prolongation of trend 2000-2007 and actual February 2020 index
Source: Eurostat (sts_inpr_m)

As mentioned above, the impact of the Covid-19 crisis on industrial production is analysed in a dedicated article.

Comparison with structural business statistics (SBS)

The long-term development of the STS indicators indicates strong structural changes in the industry sector in the European Union between 2000 and 2020: some industries developed in a very dynamic fashion, while others declined. This development is also confirmed by structural business statistics (SBS). Structural business statistics are only collected annually and they describe the performance and structure of European businesses in much greater detail than STS, but are available much later than short-term statistics.

Figure 7 shows the most recent (2018) shares of the various industries in total manufacturing. The largest manufacturing industries are machinery, motor vehicles and food production with shares in total manufacturing of around 10 %, while the manufacturing of tobacco, leather products, wearing apparel and textiles each account for only around 1 % of total manufacturing.

Figure 7: Shares in total manufacturing (value added), EU, 2018
Source: Eurostat (sbs_na_ind_r2)

Figure 8 shows the relative gains and losses of the various industries compared with the shares in value added which it had in 2011 (i.e. differences of the industries’ shares in total manufacturing in % of the 2011 shares). Unfortunately, no earlier comparable data for the current EU aggregate of 27 Member States are available for SBS so that a full comparison with the STS data is not possible. The figure shows that the share of coke and refined petroleum products has increased by almost one third in this relatively short time, while the share of printing and reproduction of recorded media declined by similar proportions. It should be noted however, that the shares of these industries in the total industrial value added are relatively small.

Figure 8: Relative gains and losses in importance of manufacturing industries between 2011 and 2018, EU
Source: Eurostat (sbs_na_ind_r2)

While not fully comparable, data from STS and SBS largely confirm the same basic trends in European industry and manufacturing. Both statistics show the decline of the wearing apparel and textile industries for example. The relative growth in the tobacco industry in SBS may be partly explained by the shorter observation period and the fact that this industry mainly declined in the early years 2000 – 2007.

Apart from the different periods covered, there are also some differences in the concepts used in both statistics and significant differences in the data collection. STS data have to be available soon after the reference period. The annual data presented here are calculated on the basis of monthly data which may be obtained from administrative sources (e.g. monthly value added tax declarations) and monthly statistical surveys that cover only the larger companies in the industry. SBS data are collected annually and use much more complete databases, e.g. annual corporate tax data and annual statistical surveys covering more companies.

Figure 9 shows the trends in EU manufacturing as represented by SBS and STS. In order to make the statistics comparable, the absolute data from SBS were converted to indices with the reference year 2015.

Figure 9: Manufacturing, trends in STS and SBS, EU, 2015 = 100
Source: Eurostat (sbs_na_ind_r2), (sts_inpr_a)

The differences between STS and SBS depend to a large degree on different national production systems. Figure 10 shows the trends in manufacturing in Czechia as reflected by SBS and STS. Czechia is the country in the EU for which both statistics show the closest connection, apart from the earlier years both data series are almost identical. Figure 11 shows – as a contrast – the respective series for Bulgaria, where STS and SBS data are connected in a comparatively loose fashion.

Figure 10: Czechia, Manufacturing, trends in STS and SBS, 2015 = 100
Source: Eurostat (sbs_na_ind_r2), (sts_inpr_a)
Figure 11: Bulgaria, Manufacturing, trends in STS and SBS, 2015 = 100
Source: Eurostat (sbs_na_ind_r2), (sts_inpr_a)

Country analysis

Just as the various industries have developed in a very different fashion since the year 2000 so did the industrial production of the EU Member States (Figure 12). Slovakia, Poland and Estonia were the EU Member States with the fastest industrial growth between 2000 and 2020; these countries had average annual growth rates of more than 4 %. In Greece, Italy and Spain, industrial production contracted by more than 1 % on average every year since 2000. Ireland is a rather special case; while the country showed an above average development in industrial growth between 2000 and 2014, its statistics were heavily revised in 2015 and, as a consequence, the index of industrial production increased by more than 25 points between 2014 and 2015. Since then the country’s industrial production statistics stayed on a rather high level overall, but depicted strong cyclical movements.

Figure 12: Industrial production, EU and fastest and slowest developing countries, Monthly data, calendar and seasonally adjusted, 2000 = 100
2000 = 100, Source: Eurostat (sts_inpr_m)

An overview of all EU countries for the different periods between 2000 and 2020 is provided in Table 4. During the early years of the new millennium, the EU’s average growth rate in industrial production was 2.0 %, but many countries experienced growth rates that were much higher (e.g. Estonia, Lithuania, Slovakia, Bulgaria, and Poland). During the crisis years 2007 and 2008, two-digit rates of decline were quite common, even in the countries that had grown dynamically before. After the most acute phase of the crisis, industrial growth picked up again during the years 2010 to 2019, although the EU as a whole only reached rates of change that were half as big as in the years before the crisis. Some countries only reached very moderate growth rates of less than 1 % or even showed a slow but protracted decline (Greece, the Netherlands, Malta, Italy, Luxembourg, Cyprus).

Table 4: Countries average annual industry growth rates during different periods
Source: Eurostat, special calculations (sts_inpr_a)

In the same way as for the manufacturing industries (see Figure 6), a difference can be calculated between the total industry level which countries had actually reached in February 2020 (before the dramatic events of the Covid-19 crisis) and the level they would have – hypothetically – reached if the growth trend of the years 2000 – 2007 had continued (Figure 13). The differences between countries are quite remarkable. Between the year 2000 and the year 2007, Bulgaria had an annual growth rate of 7.8 %. Had this trend continued, the Bulgarian industrial production would have been around 150 % higher in February 2020 than it actually was – a result of the strong pre-crisis growth on the one hand and the comparatively moderate annual growth of 1.9 % after the financial and economic crisis (which was however still higher than the EU average) on the other hand.

Figure 13: EU and Member States, total industry, percentage difference between prolongation of trend 2000-2007 and actual February 2020 index
Source: Eurostat (sts_inpr_m)

For the EU as a whole the difference between the actual February 2020 value and the level that would have been reached with a continuation of the 2000 – 2007 trend is much lower (about 37 %). In Romania, for example, the industrial development was more dynamic after the financial and economic crisis than before. If it had not been for a decline in production in the second half of 2019, the continuation of the early trend would even have resulted in a lower index level than the actual development.


Source data for tables and graphs

Data sources

Despite its name the industrial production index is not intended to measure production but should – in theory – reflect the development of value added in the different branches of industry. This means that the inputs obtained by one branch from another must be deducted from its gross output. In this way, double counting of production is prevented and the degree of vertical integration of branches should not influence the results for the indicator.

In practice, however, it is difficult to collect value-added data on a monthly basis. Most statistical institutes therefore derive monthly production data from other sources including deflated turnover, physical production data, labour input, intermediate consumption of raw materials and energy etc.

Eurostat publishes, on a monthly basis, the industrial production index for the EU, for the euro area and the EU Member States; data are also collected for several non-EU countries. Data are presented in calendar adjusted/working-day adjusted and in seasonally adjusted form. Currently the indices for industrial production are calculated with 2015 as the base year (=100).

Context

The industrial production index is one of the most important short-term statistics indicators. It is used to identify turning points in the economic development at an early stage and to assess the future development of GDP. In order to serve this purpose it is available on a monthly basis in a detailed activity breakdown and with a rather short delay (1 month and 10 days). The industrial production index is one of the so-called 'Principal European economic indicators (PEEI)' which are used to monitor and steer economic and monetary policies in the EU and in the euro area.

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