Strong EU Industrial Output As Supply Chain Issues Ease

Strong EU Industrial Output As Supply Chain Issues Ease

Wednesday 16th February 2022 – 12:15 (GMT)

Figures released by Eurostat have indicated eurozone industrial output rose at a stronger pace than expected at the end of last year and now sits above pre-pandemic levels. Driven by a rebound in car production, coupled with the easing of supply chain bottlenecks, the sector grew by 1.2% over December 2021 versus the market expectations of a 0.3% increase.

A rise in production of capital goods (2.6% vs 1.4% in November), intermediate goods (0.5% vs 1%) and non-durable goods (0.4% vs 3.5%) more than offset a decline in energy (-0.8% from 1.6%) and durable consumer goods (-0.3% vs 0.2%).

Following an upwardly revised figure in November, December’s reading means eurozone industrial output grew 7.8% over the course of 2021 – a figure that seemed unrealistic considering trading conditions at the beginning of the year.

Global supply chains buckled under the pressure of reduced manoeuvrability and staffing shortages caused by the pandemic. However, recent easing of shipping rates and raw material costs have indicated a slight improvement in some of these areas.

The latest numbers will also be of interest to the European Central Bank who are under increasing pressure to take a less hawkish approach in response to rising inflationary pressures across the continent.

Francois Villeroy de Galhau, a prominent member of the European Central Bank’s Governing Council, recently stated it could end its current bond purchasing programme as soon as Q3 2022. This immediately weakened the euro and attentions now turn to next months ECB monetary policy meeting taking place on the 10th March.