June 12, 2020 / 10:39 AM / a month ago

Euro zone April industrial output plunge worst on record; recovery seen

FILE PHOTO: A worker at the Liebherr manufacturing company, which produces gear cutting tools, wears a protective mask and gloves as he works in the factory a day after its re-opened, as Italy begins a staged end to a nationwide lockdown due to a spread of the coronavirus disease (COVID-19), in Collegno, Italy, May 5, 2020. REUTERS/Massimo Pinca/File Photo

BRUSSELS (Reuters) - Euro zone industrial output fell the most on record in April as coronavirus lockdowns halted activity across the region, data showed on Friday, marking the low point of the pandemic-induced contraction.

The European Union’s statistics office, Eurostat, said industrial output in the 19 countries sharing the euro fell 17.1% month-on-month for a 28.0% year-on-year drop, the steepest declines since records began in 1991.

Economists polled by Reuters had expected a 20.0% monthly and 29.5% annual decline.

“We see this as the bottom of this crisis, with industrial production standing 73% below February values. May should see a strong bounce, but the pace of recovery after that is more uncertain,” said Jacob Nell, economist at Morgan Stanley bank.

The sectors that suffered most were durable consumer goods, where output plunged 28.9% month-on-month for a 47.7% year-on-year drop and capital goods, with a 26.6% monthly and 40.9% annual decline.

The euro zone’s biggest economy, Germany, saw a 30.2% fall in industrial output year-on-year. The second and third biggest, France and Italy, showed production shrinking even more - 34.9% and 42.5% respectively. The fourth biggest economy, Spain, had a 34.3% fall.

The hardest hit was the smallest euro zone economy, Luxembourg, with a 43.9% reduction in output. Ireland was the only country in the 27-nation European Union to show a year-on-year increase in production, of 5.5%.

“As lingering concerns like a new trade war and Brexit continue to be risks to the recovery phase in the months ahead, it could be a long road ahead before industry reaches output seen at the start of 2020,” said Bert Colijn, economist at ING.

“So plenty of risks surrounding industry at the moment, but the recent easing of lockdowns means that activity in April almost certainly marked the bottom,” he said.

Reporting by Jan Strupczewski; editing by Philip Blenkinsop, Larry King

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