Eurozone May Industrial Output Unexpectedly Drops 0.2%
Claire Weston
Eurozone industrial output fell 0.2% month-on-month in May, snapping a three-month streak of gains and reversing economists' forecast of a +0.2% rise — with Q1 GDP already contracting, a prolonged manufacturing slump raises the risk of recession.
Why is this reading a surprise?
Economists expected May industrial output to rise 0.2%; the actual print was −0.2% — a full directional miss.
April's figure was revised to +0.3%, making the May reversal a clean break from three consecutive months of growth.
This means → the market's optimistic narrative on eurozone manufacturing needs recalibrating; a single-month flip is enough to shake confidence.
Were the PMIs already flashing warnings?
The S&P Global eurozone manufacturing PMI — a monthly gauge of factory activity — fell to a two-month low in May.
Input-cost inflation hit its fastest pace since May 2022, squeezing factories between weakening demand and rising costs.
The June PMI slid further. This reflects a sustained loss of factory momentum, not a one-off dip.
What was propping up the earlier strength?
After the Iran conflict erupted in late February, some clients front-loaded orders to hedge against price hikes and supply shortages.
Asian competitors took a bigger hit, channelling additional demand toward European manufacturers.
In plain terms = the earlier gains had a "pull-forward" element; May's weakness signals that temporary tailwind is fading.
How close is the eurozone to recession?
Q1 GDP already contracted; geopolitical uncertainty has markets worried Q2 could tip into formal recession.
Services output rose 0.7% in April, still cushioning the broader economy — manufacturing drags while services holds.
This means → whether manufacturing regains momentum in the second half is the key variable in determining if the eurozone avoids recession.
Content is for reference only, not financial advice.