Eurozone industrial production has shown strong momentum in recent months, a promising sign for the region’s economy. The evidence is that industrial production took off in September, October, and November. This was its highest point in these past two-and-a-half years, excepting the wild swings seen in March. This positive movement reflects a comeback from past plateauing, especially as the industry struggled with contraction in late 2024.
In November, Eurozone industrial production posted an impressive increase of 0.7%. This increase is now the third straight month of climbing production, indicating an industry beginning to cool from its most volatile inflationary levels. This expansion is being driven by the production of capital goods. It had a fantastic jump of 3.6% over the same time last year. This increase is a clear indicator of increased capital investment and contracting demand within the industry, driving the entire industrial production output.
We know that American firms have massively frontloaded European products. In combination, this has led to an increase in industrial production across the Eurozone. On the ground across Eurozone, this strategic reorientation supercharges manufacturers. Now they are better positioned to capitalize on international demand. For all of these positive signs, the landscape has changed as the manufacturing Purchasing Managers’ Index (PMI) has softened. It decreased from 50.7 in August to 48.8 in December. This bit of bad news means that despite the growing amount that is being produced, the mood among manufacturers isn’t quite so sunny.
The outlook for Eurozone industrial production is brightening. Predictions still show that the investment side of the equation will power overall growth all year long. Production levels keep hitting new records, making for a bedrock environment for growth. The PMI’s downward trend suggests a difficult road ahead for manufacturers. The PMI’s continued drop is worrisome, suggesting future growth may slow further. This failure underscores the critical need for long-term investment and producer certainty.