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Economy in Brief

Mixed Fortunes for European Industry
by Carol Stone September 8, 2004

Yesterday, we described an improving trend in German industrial production through July, an encouraging sign for Europe as a whole. At the same time, not all countries are fully on board yet. Data reported yesterday for the UK show two months of hesitation and a report this morning from the Netherlands indicates that Dutch industry is still struggling to get on a sustained uptrend.

UK output fell 0.3% in July following a similar decline in June. Trends are mixed among UK sectors, as production of capital goods and of consumer durable goods increased, while that of intermediate products and energy has had a listless performance and consumer nondurables continue to slide. Obviously, the improving pattern in investment and consumer durables, the most cyclical products, is quite favorable in the midst of an otherwise clouded picture. Indeed, capital goods output is the highest since the summer of 2001.

In the Netherlands, manufacturing output has been uneven. It appeared to reach a bottom at the middle of last year and tilted up slightly in subsequent months. However, the declines in May and again in July erase most of those gains and leave factories just above their year-ago operating pace. Details will be published tomorrow. In the meantime, through June, food and textile production in the Netherlands were sources of weakness, as they have been in the UK. This suggests that consumer demand in those countries could still be sluggish and/or that import competition is pressuring domestic industry.

Industrial Production,
% Changes
July 2004 June 2004 May 2004 Year/ Year 2003 2002 2001
UK -0.3 -0.3 0.4 -2.5 -0.1 -2.5 -1.6
Netherlands* -0.6 0.1 -0.7 0.2 -2.8 -0.8 -0.1
Germany 1.6 -1.5 1.0 -1.1 0.1 -1.3 -0.8
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