ECONOMIC AND MONETARY DEVELOPMENTS Output, demand and the labour market
sector (see Chart 48). Value added in the manufacturing sector has been hit by the sharp slowdown in domestic and external demand, with activity shrinking in each of the major sub-sectors. The pace of contraction in industrial production in the first quarter of 2009 was unprecedented. The overall decline in production in the euro area over the past half year has been so severe that it has offset almost all the expansion recorded over the past ten years. Among the main industrial groupings, production has fallen close to its level of early 1999, in the case of capital goods, or even below that level, in the case of intermediate and consumer goods. Production only remained clearly above its 1999 level in the less cyclical energy sector. Business surveys signal that the contraction in industrial activity has recently passed an inflection point and has begun to moderate somewhat, albeit starting from very negative rates (see Chart 49). The manufacturing Purchasing Managers’ Index has increased over the past three months (covering the period from March to May), albeit remaining below the reference level of 50 and thus indicating a further decline in activity. Other industrial confidence surveys and anecdotal evidence confirm a less pessimistic picture within the euro area industrial sector. As in the industrial sector, value added in the construction sector has fallen in each consecutive quarter since the second quarter of 2008. The downturn in construction differs in its intensity across sub-sectors and countries. The decline has been more severe in residential and commercial property, while civil engineering has shown greater resilience. The vast majority of euro area countries Chart 48 Industrial production growth and contributions
Chart 49 Industrial production, industrial confidence and the PMI
(growth rate and percentage point contributions; monthly data; seasonally adjusted)
(monthly data; seasonally adjusted) industrial production 1) (left-hand scale) industrial confidence 2) (right-hand scale) PMI 3) (right-hand scale)
capital goods consumer goods intermediate goods energy total excluding construction 3.0
3.0
3
12
2.0
2.0
2
8
1.0
1.0
1
4
0
0
0.0
0.0
-1.0
-1.0
-1
-2.0
-2.0
-2
-3.0
-3.0
-3
-4.0
-4.0
-4
-5.0
-5.0
-5
-6.0
-6.0
-6
-28
-7.0
-7.0
-7
-32
-8.0
-8.0
-8
-36
-9.0
-9.0
-9
2004
2005
2006
2007
2008
Sources: Eurostat and ECB calculations. Notes: Data shown are calculated as three-month moving averages against the corresponding average three months earlier. Data refer to the euro area including Slovakia.
-4 -8 -12 -16 -20 -24
-40 2004
2005
2006
2007
2008
Sources: Eurostat, European Commission Business and Consumer Surveys, Markit and ECB calculations. Notes: All series refer to manufacturing. Data refer to the euro area including Slovakia. 1) Three-month-on-three-month percentage changes. 2) Percentage balances; changes compared with three months earlier. 3) Purchasing Managers’ Index; deviations from an index value of 50.
ECB Monthly Bulletin June 2009
73