Eurozone’s industrial production witness sharp fall in July, unlikely to regain quick momentum

Industrial production in the eurozone witnessed a sharp fall during the month of July, a sign that the common currency zone’s modest economic recovery is unlikely to quickly regain momentum after a second-quarter slowdown.

Industrial production in the 19 countries that share the euro was down 1.1 percent from June compared to a 0.8 percent rise the month before and missing expectations for a 0.9 percent fall, data released by the statistics agency Eurostat showed Wednesday.

The production of capital goods declined by 1.7 percent, while energy production was 1.4 percent lower and durable consumer goods production fell 0.7 percent. The production of intermediate goods was down 0.5 percent while production of non-durable consumer goods was unchanged.

On the year, industrial production in the euro bloc was 0.5 percent lower, which was ahead of analysts’ expectations of a 0.7 percent drop. In the EU-28 group of countries, industrial production fell 1 percent on the month and 0.1 percent on the year.

Moreover, surveys of purchasing managers released last week pointed to a slight slowing of growth in August as German service providers faltered. Other figures showed that the jobless rate remained unchanged in July, having moved steadily lower in the earlier months of the year, while businesses and consumers became less upbeat about their prospects in August, reports said.

Meanwhile, the European Central Bank said that the Eurozone economic recovery is expected to be dampened by still subdued foreign demand, partly related to the uncertainties following the UK referendum outcome, among others. The bank trimmed the growth projections for each of the next two years to 1.6 percent.