Manufacturing production was 4.5% higher than a year ago, but was almost unchanged compared to the first quarter, in the last three months to July 2011. In addition, EU manufacturing production in recent months has been affected by supply disruptions stemming from the Japanese tsunami.

From May to July 2011, EU manufacturing production was 4.5% higher than a year ago, but was almost unchanged compared to the first quarter according to the European Commission. Manufacturing output is now some 14% higher than its trough in early 2009 and still 8% below its peak in early 2008. Since the cyclical peak in 2008, manufacturing jobs have nevertheless contracted by some 11%. The unemployment rate has been stable for three months and some improvements are now also visible in some countries. However, industrial producer prices in July gained 0.5% in the euro area and 0.4% in the EU compared with June. With regard to the Member States, recovery is now visible in all countries, except Cyprus and Greece. Although EU manufacturing output is still below its pre-crisis level, in some countries it is now well above pre-crisis levels, notably Poland, Slovakia, Belgium and Ireland and Estonia.

Moreover, the general causes of this slowdown in the recovery of manufacturing output in the second quarter 2011 are the highest increases in output have been in computer and electronics, and mechanical and engineering sectors, whilst a contraction has been registered predominantly in intermediate goods, in particular tobacco, textiles, wearing apparel, and other non-metallic mineral products. On the other hand, labour markets remain rather stable. Recent data and forecasts for services, including tourism, remain positive, but will depend on the general economic situation. Extra-EU exports have recovered their former peak. Growth in intra-EU trade, internal demand and private consumption continue to be subdued and lag behind growth in emerging countries.

High energy and other input prices, supply disruptions from the Japanese earthquake, fiscal retrenchment in some countries, and some continued limitations on access to finance are adversely affecting the dynamics of the recovery. Output in the construction sector has stabilised at a relatively low level, with a recovery visible in civil engineering. Recent falls in business confidence indicate a slower growth rate in the second half of the year, but industrial confidence is still above its long-term average.