Eurozone industry and trade took major hits in April, likely reflecting US tariffs announcements, challenging the view of economists that the bloc is holding up well in the face of economic turmoil.
Industrial production fell by 2.4 percent month-on-month in April, more than the already-weak expectation of a 1.7 percent fall in a Reuters poll of economists, as every segment within industry suffered a contraction, data from Eurostat showed yesterday.
Trade also suffered, with the surplus of the nations sharing the euro falling to just 9.9 billion euros (US$11.4 billion) compared with the previous month’s 37.3 billion euros.
Photo: Reuters
The weak figures were not unexpected as US firms were front-loading purchases in February and March in anticipation of the April 2 tariff announcement, but the reversal is larger than many had anticipated, indicating downside risks to annual economic growth forecasts, which are already below 1 percent.
The eurozone’s exports to nations outside the bloc fell by 8.2 percent in April, while figures for the broader EU showed a 9.7 percent drop, Eurostat said.
The EU’s total exports to the US, its biggest trading partner, totaled 47.6 billion euros in April, well down on the 71.1 billion euros reported a month earlier, which was itself considered unusually high.
The drop was mainly driven by sharply lower chemicals exports, likely relating mostly to pharmaceutical exports from Ireland, which hosts a number of international firms that are located there for tax reasons.
Irish pharmaceutical exports to the US surged in the months leading up to the tariffs, pushing economic growth up to exceptional levels.
The figures also explain why Irish industry contracted by 15 percent in April, dragging eurozone production lower.
The hit to the industry was so large that it erased nearly all gains from the past year, and output in April was just 0.8 percent higher than a year earlier, with only nondurable consumer goods showing any year-on-year increase.
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