Eurozone industrial output rises most since Nov 2020

Eurozone industrial production jumped by 2.6% month-over-month in March 2025, marking the strongest monthly gain since November 2020 and significantly accelerating from a 1.1% increase in February, according to data from Eurostat.

Eurozone industrial output rises most since Nov 2020

The result far exceeded market expectations of a 1.8% rise, offering a rare bright spot for the region’s manufacturing sector, which has been grappling with persistent global trade tensions and a fragile external environment. The rebound was largely fueled by a sharp recovery in the output of durable consumer goods, which surged 3.1% after contracting by 2.0% in February. This suggests improving consumer sentiment and stronger demand for big-ticket items, possibly supported by easing inflationary pressures and lower financing costs. Capital goods production also accelerated markedly, rising 3.2% compared to a 0.8% gain in the previous month, reflecting renewed investment activity amid expectations of increased public spending on infrastructure and defense across several member states. Production of non-durable consumer goods also showed solid momentum, growing 2.3% following a 2.1% rise in February, while output of intermediate goods continued to expand at a stable pace of 0.6%, pointing to sustained activity in core manufacturing inputs. However, energy output bucked the broader trend, falling by 0.5% and reversing the 0.6% increase recorded in February, likely reflecting mild weather conditions and the ongoing transition toward renewable energy sources reducing fossil fuel generation.

Annual figures

On an annual basis, industrial production expanded by 3.6% in March, accelerating sharply from the 1.0% increase posted in February and marking the fastest year-on-year growth since mid-2022. The strong annual performance was underpinned by base effects from last year’s manufacturing slowdown, as well as resilient domestic demand and gradual improvements in supply chain conditions. Despite the robust figures, analysts caution that the outlook for the manufacturing sector remains mixed. The continued uncertainty surrounding U.S. tariff policies, geopolitical tensions, and sluggish demand from key trading partners, particularly China, could weigh on export-oriented industries in the coming months. Moreover, the recent strength in industrial output is expected to moderate as the temporary boost from backlogged orders and restocking fades, and global demand conditions remain fragile. Nonetheless, the March data provided a positive signal that the Eurozone’s industrial sector may still have pockets of resilience, particularly in consumer and investment-related segments, which could help underpin broader economic activity as the bloc navigates a challenging external landscape.