Industrial production fell sharply in a number of European nations
during September, an indication that the continent's economy is on the
brink of a sharp downturn.
A downturn would not come as a surprise to policy makers, with the
European Commission slashing its growth forecasts for the European Union
and the euro zone for 2012 and 2013 on Wednesday and the European
Central Bank indicating Thursday that it would cut its forecasts next
month.
"Overall, there will be a noticeably weaker economic dynamic in the winter half-year," the ministry wrote.
In its monthly note on the economic outlook, Germany's finance ministry
Friday warned that Europe's largest national economy will weaken
"noticeably" during the winter months as companies hold back on
investments because of the euro zone's fiscal and banking crisis.
In France, figures released Friday showed industrial production fell
2.7% from a month earlier, while in Italy production fell by 1.5% in
seasonally-adjusted terms. The data followed the release of figures
Wednesday that showed industrial production in Germany fell by 1.8%, and
figures from Ireland Tuesday that showed output fell by a staggering
13.9%.
In both the euro zone and EU economies, the provision of services is
by far the largest economic activity. But industrial production is more
volatile, and tends to have a greater influence on the rate at which
economies are growing or contracting.
The widespread decline in September comes after modest expansions in
July and August, and suggests production in the third quarter as a whole
was down, an indication that figures to be released Thursday will show
the euro zone's economy contracted again in the third quarter.
The European auto industry is one of the largest employers in Europe
with about two million direct jobs and another 10 million in related
manufacturing including other sectors such as steel, chemical and
textile. Auto makers produce more than 17 million cars, trucks, vans and
buses in Europe annually, which is roughly 24% of global vehicle
production, according to data from industry association ACEA.
The European Commission plans to bring together auto makers, trade
union representatives and industry ministers by the end of November to
discuss measures to tackle the deepening crisis in the region's car
industry and take coordinated action to improve competitiveness.
Europe isn't alone in experiencing an industrial slowdown. Figures
compiled by the Netherlands Bureau for Economic Policy Analysis show
global industrial output was flat in August, with contractions in the
U.S. and Japan, while surveys of purchasing managers indicate output
fell again in October. While outside the euro zone there are signs that
new orders are picking up, within the currency area orders continued to
fall, indicate output will too during coming months.
