Euro Area industrial disaster, none is investing anymore

Industrial production in the Euro Area fell and also soundly in January compared to say 2023, but this time Germany cannot be blamed.

Industrial production in the Euro Area plummeted 3.2 percent month-on-month in January 2024, marking a sharp reversal from the downwardly revised 1.6 percent growth recorded in December and going much worse than market forecasts of a 1.5 percent drop.

This was the sharpest contraction in activity since March of the previous year and the second largest decline since the aftermath of the COVID-19 outbreak in April 2020, mainly due to a staggering 14.5 percent drop in capital goods production. This means that at the European level, companies are not investing and have stopped doing so resoundingly.

In addition, output also fell for durable goods (-1.2 percent compared to 1.0 percent in December) and for consumer non-durable goods (-0.3 percent compared to -2.2 percent). However, output of intermediate goods rose a remarkable 2.6 percent, recovering from five consecutive months of contraction or stagnation, while energy production grew 0.5 percent, marking the fourth consecutive period of expansion.

Here is the related graph

So the EU industry is not only producing little, but it is not investing, and thus, going forward, will lose positions in the future as well.

On the other hand, if we assess which country was most responsible for this fall, the blame this time is not on Germany, which saw an increase in industrial production in January compared to December (but make no mistake, orders collapsed)

Italy and Spain also saw an increase. Who then saw such a sharp decline?

First of all, France’s 1.1 percent drop also linked to the strikes that stopped or slowed refineries, so the drop could be seen as cyclical

But the real slump was in the Netherlands, with a month-on-month drop of 3.8 percent

Here the year-on-year decline is 4 percent, indicating how industry in the Netherlands is in great difficulty,bordering on deindustrialization.

Of course,these problems are ignored by European authorities, who are too busy pursuing their own environmentalist utopias. Instead, it is precisely the companies that should be at the center of the authority’s concerns.