Eurozone industrial output falls again

By the Editorial Team · Friday, September 18, 2026

Industrial production in the eurozone declined by 0.1 percent in July, marking the second consecutive monthly drop, driven in part by a temporary shutdown in a German auto plant and rising energy costs. Despite positive manufacturing sentiment surveys, the continued contraction highlights ongoing challenges from elevated inflation and higher energy prices, which the ECB expects to keep inflation elevated through the end of the year.

Industrial production in the eurozone declined for a second consecutive month in July, underscoring ongoing challenges facing the region’s manufacturing sector amid rising energy costs and uneven economic conditions. According to data released by Eurostat on Wednesday, output fell by 0.1 percent compared with June, matching a similar decrease in the prior month. This result was less severe than the 0.4 percent decline forecast by economists surveyed by The Wall Street Journal.

The contraction occurred despite improved sentiment among manufacturers, as purchasing managers’ surveys by S&P Global indicated a pickup in manufacturing activity during July and a notable acceleration in August, which marked the fastest expansion in over four years. Analysts suggest the gap between these survey indications and official production figures points to weaknesses in some of the largest economies in the eurozone.

Germany, the region’s largest economy, saw a 1.5 percent decline in industrial output in July, while production in France dropped by 0.4 percent. ING economist Bert Colijn described the data as indicative of a loss of momentum in the industrial sector, pointing to notable softness particularly in consumer-facing industries.

Capital Economics economist Megan Fisher attributed part of the July decline to a temporary shutdown at a German automobile plant, which she expects to reverse in August. However, higher energy costs remain a significant obstacle for manufacturers. Inflation within the eurozone accelerated to 3.3 percent in August, reaching its highest level in nearly three years.

Energy prices are a major factor in rising production costs. Brent crude oil prices have recently risen above $100 per barrel, while domestic producer energy prices increased by 5.6 percent in July, with expectations of further increases since then, according to Fisher. These pressures come as the European Central Bank (ECB) has raised interest rates twice since the start of the conflict in Iran, further constraining industrial activity.

At its most recent meeting last week, the ECB projected that the energy shock would push inflation to a peak of 3.6 percent in the fourth quarter of this year. The central bank also revised upward its inflation forecasts for 2027 and 2028, signaling ongoing concerns about the persistence of price pressures in the eurozone economy.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.