European Industrial Production, December 2023:  Data published by Eurostat this week shows a sharp increase in industrial production (IP);  it is estimated to have grown by +2.6% compared to November in both the EU and the Euro-zone.  However, care is needed in interpreting this due to a massive increase of +23.5% in Ireland where the data is often heavily affected by the impact of a number of multi-national headquarters operations located there for tax purposes.

It is also worth noting that the November figures have been significantly revised;  for the EU the estimate is now of growth of +0.5% (was -0.2%) and for the Euro-zone it is now +0.4% (from -0.3%).

Comparing the latest levels with those in December 2022, total IP increased by +1.2% for both the EU and the Euro-zone, although this mainly due to an increase of +44.7% for Ireland.  Taking the average level of IP for the year, there was a decrease of -2.0% in the EU and -2.4% for the Euro-zone.

Looking at the capital goods industries – the most important of the sub-sectors for us –  output in the EU was +18.0% higher than in November 2023 and grew by +8.6% compared to December 2022.  For the Euro-zone, the growth rates were +20.5% and +9.4% respectively.  Although we don’t get the breakdown for individual countries, as this was the strongest of the sub-sectors, it seems likely that the very strong growth in total IP in Ireland was largely in this sector.

Sticking with the 12-month view, of the 25 Member States who have published the data for December 2023 (Cyprus is not yet available and Romania’s has been suppressed for confidentiality reasons), total IP increased in 8, was unchanged in 1 (Slovakia) and fell in the other 16.  Apart from Ireland, the strongest growth was in Denmark (+6.7%) and Malta (+5.0%) while the largest percentage reductions were in Slovenia (-10.2%), Hungary (-8.7%) and Bulgaria (-6.9%).

You can get the full details from the Eurostat News Release which can be downloaded from their website at https://ec.europa.eu/eurostat/news/euro-indicators (14 February) or requested from MTA.

European GDP, 4th Quarter 2023:  In an update to its preliminary publication a couple of weeks ago, Eurostat revised its estimate of GDP growth compared to the 3rd quarter for the EU up to +0.1% but there is no change for the Euro-zone which remains at the same level.  Given that GDP fell by -0.1% for both the EU and the Euro-zone in Q3, the slightly better outcomes for the 4th period of 2023 mean that a recession has been avoided, at least for now.

The original estimate of GDP growth of +0.5% for 2023 in both the EU and the Euro-zone are unchanged.

This release also brings data on more countries with 22 of the 27 Member States having released their figures for Q4-23;  of these, 6 (Estonia, Finland, Germany, Ireland, Lithuania and Romania) saw a contraction in their economy in the final period of last year but only Estonia, Finland and Ireland also had a negative reading in Q3 and, therefore, meet the usual definition of a recession for individual countries.

Denmark and Luxembourg are two of the countries that don’t yet have their Q4 numbers and both of these had a negative trend in both Q2 and Q3 of last year and are already in recession;  it remains to be seen if this is extended or ended when their Q4 data is published.  Austria, Netherlands and Sweden all saw recessions ended by a positive growth number in Q4-2023.

You can get the full details, including 4 quarter trends for the region and the 22 Member States in the Eurostat News Release which can be downloaded from their website at https://ec.europa.eu/eurostat/news/euro-indicators (14 February) or requested from MTA.

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