Euro area’s industrial production fell sharply in March, to decline further in April

Euro area’s industrial production fell a record 11.3 percent sequentially and 12.9 percent year-on-year in March. Today’s data is the lowest level seen since November 2009 as restrictions on economic activity and soft demand negatively impacted the economy.

Given a solid beginning to the year, production was down a lesser 3.3 percent quarter-on-quarter in the first quarter of 2020. Production of capital goods fell 15.9 percent sequentially, while that of the intermediate goods dropped 11 percent. Consumer durables fell 26.3 percent sequentially.

Out of the main sub-sectors, autos were hardest hit with output falling 40.8 percent sequentially to the lowest level in over 26 years. Meanwhile, pharmaceuticals output surged 15.1 percent sequentially to a series high. Given the strong demand, output of food products remained well, dropping only 1.5 percent while production of computers and related items rose 4 percent.

Among member states, only Greece, Lithuania and Finland recorded higher production on the month. On the contrary, output in each of the four largest member states dropped by over 10 percent, with Italy’s fall of 28.4 percent most severe.

“Looking ahead, production will drop even more dramatically, once again led by autos. We already know that German car output fell an extraordinary 97 percent Y/Y last month, with factory shutdowns hitting production in other member states too”, said Daiwa Capital Market Research.

While manufacturing workers have returned to work in most member states, production might remain below pre-crisis levels because of ongoing social distancing and soft demand.