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"After a solid increase in the first quarter of 2016, the industrial output is set for a clear slowdown in the second quarter, confirming our view that GDP growth will decelerate in spring after a strong performance".
-Daniel Vernazza, UniCredit
Euro zone industrial production markedly worsened and even missed estimates in May, giving back almost all of the gains recorded the previous month in a fresh indication that an economic recovery which is now in its fourth year remains modest and vulnerable to new setbacks. According to the European Union's statistical office Eurostat, output in manufacturing, mining and utilities in the 19-nation bloc rose 0.5% year-on-year during the fifth month of the year, down from the 2.0% upturn seen previously. Analysts anticipated a deceleration to 1.4% growth in May.
Industrial production across the 19 countries that share the euro has been highly volatile over recent months, jumping in some and slumping in others. Moreover, the indications for the second quarter are not encouraging, and consistent with other signs that growth was slowing even before the U.K. voted to leave the European Union on June 23, creating a period of uncertainty that the European Central Bank expects will slow the recovery. Many economists estimate the Euro zone economy slowed during the three-months to June, growing by between 0.3% and 0.4% after recording an expansion of 0.6% in the first quarter. However, a further slowdown seems likely over coming months.