Hopes that Europe’s crucial manufacturing sector might be poised to recover were dampened yesterday when official figures showed industrial production unexpectedly fell in June.
Figures from the EU’s statistics office Eurostat showed that industrial production in the 16 countries that use the euro dropped 0.6 percent in June from the previous month. That fell short of expectations for a modest 0.3 percent rise. June’s decline offset an equivalent increase recorded in May.
That means that euro zone industrial output fell by 3 percent in the second quarter of this year from the previous three month period.
Though sizable, the drop was much less than the 7.5 percent drop recorded in the first quarter when the global recession appears to have been at its most severe.
The industrial production figures are an important component in the compilation of overall economic output figures for the euro zone, and the surprise drop may stoke concerns that today’s first estimate for the scale of the contraction in second-quarter GDP will be greater than anticipated.
At present, the markets are expecting a 0.5 percent quarterly decline in euro zone output during the April-June quarter, a marked improvement on the record 2.5 percent slump recorded in the first three months of the year.
The industrial sector is particularly important to the euro zone economy — the main reason behind the 2.5 percent economic contraction in the first quarter was a collapse in demand for high-value manufacturing exports, such as cars and heavy machinery, from places like Germany.
Ben May, European economist at Capital Economics, is predicting that euro zone GDP fell by 0.7 percent in the second quarter, with the industrial improvement lopping off around one percentage point from the first quarter’s drop.
In the second half of the year, he said he expects the industrial sector to be even less of a drag on the euro zone economy but cautioned that things could change as much depends on how depleted company stock levels are.
“With the inventory unwind potentially having further to run and firms still reporting that order books are shrinking, the sector may still be some way from embarking on a sustained recovery,” May said.
June’s disappointing figures come less than a week after European Central Bank president Jean-Claude Trichet sounded a more optimistic tone when he said there were signs the global economy was bottoming out and that the euro zone economy was set to start growing again next year.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
RSS