Eurozone industrial production plunges in May, potential recovery doubted

Eurozone’s industrial production fell sharply in May, snapping almost all the gains earned during the previous month, raising doubts over the potential recovery of the currency bloc, especially post Britain’s exit from the zone.

Industrial production fell by 1.2 percent in May from April, having expanded by 1.4 percent in the earlier month, an upward revision from its earlier estimate of 1.1 percent, data released by European Union’s statistics agency showed Wednesday.

Compared with May 2015, output was up just 0.5 percent. Many economists estimate the eurozone economy slowed during the three months to June, growing by between 0.3 percent and 0.4 percent after recording an expansion of 0.6 percent in the first quarter.

Moreover, industrial production across the 19 countries within the common currency bloc has been highly volatile over recent months, jumping in some and slumping in others. But over the first quarter as a whole, the output of factories, mines and utilities rose strongly after a decline in the previous three-month period, aiding a pickup in economic growth.

The currency bloc had slowed during the three months to June, growing by between 0.3 percent and 0.4 percent after recording an expansion of 0.6 percent in the first quarter, reports said.

Meanwhile, ECB President Mario Draghi estimates that the UK’s vote to depart the EU and its immediate consequences will reduce economic growth in the eurozone by up to 0.5 percent over three years, reflecting the UK’s importance as the currency area’s second-largest export market after the US, as well as the possible perception that the EU could become ungovernable.