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Investing.com -- Euro-zone industrial production increased by 1.7% month-over-month in May, exceeding market expectations of 0.9% growth and demonstrating resilience despite U.S. tariff concerns.
The May figures put industrial output 2.8% above January levels, before U.S. tariff announcements began affecting production.
The growth was primarily driven by substantial increases in Ireland (12.4%) and Germany (2.2%), partly reflecting continued front-running in the pharmaceutical sector ahead of potential tariffs.
Spain and the Netherlands also saw production increases, while output declined in other major economies including France and Italy.
The impact of U.S. tariffs on euro-zone industrial production has been more limited than initially anticipated.
This resilience may continue in the near term, as clarity on whether pharmaceuticals will face sector-specific tariffs might not emerge for several months, potentially allowing front-running in this sector to persist.
Despite the current positive performance, the medium-term outlook for euro-zone industry remains challenging.
Eventually, there will likely be some payback for the pharmaceutical sector’s tariff front-running.
Additionally, demand for euro-zone industrial goods is expected to shrink over the medium term due to weak growth in Europe and China, along with increased competition from Chinese producers.
While the threat of a 30% tariff on EU exports may prove to be a negotiating tactic, the risk of higher tariffs remains a concern for the industrial sector.
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