According to the monthly report released by the European Commission's General Directorate of Economic and Financial Affairs showing key indicators for the euro area, in June 2009 industrial confidence continued to improve in the euro area, reaching -33, up by one point from the May level. However, this is still significantly below the long-term average of -7.
Meanwhile Eurostat's (Statistical Office of the European Communities) first release confirmed euro area gross domestic product (GDP) growth at -2.5 percent in the first quarter of 2009, compared to the last quarter of 2008. This is the fourth consecutive and largest contraction after -0.3 percent in Q2 2008, -0.4 percent in Q3 2008 and -1.8 percent in the last quarter of 2008. As to the breakdown, the GDP fall was mainly driven by declines in investment, net exports and large destocking. GDP contracted in all the larger euro area member states; in Germany by 3.8 percent, in France by 1.2 percent, in Italy by 2.4 percent and in Spain by 1.9 percent. Euro area GDP growth in Q1 2009 declined by -4.8 percent compared to the first quarter of 2008.
On the other hand, in April 2009 industrial production in the euro area continued to fall for the twelfth month in a row, by 1.9 percent month on month and by 21.6 percent compared to April 2008. At country level, the results are mixed, with declines for Germany of 2.1 percent, for France of 1.4 percent and for Netherlands of 2.6 percent, and increases for Spain of 2.0 percent, for Italy of 1.1 percent and for the United Kingdom of 0.2 percent, compared to March 2009.
Investments fell by 10.4 percent in the euro area in the first quarter of the current year compared to the same period of 2008 due to sluggish demand, decreasing profits, falling capacity utilization and still-tight financing conditions. Capacity utilization continued to fall sharply, from 74.7 percent in Q1 2009 to 70.5 percent in Q2 2009, the lowest level since the start of the series in 1985.
According to Eurostat's flash estimate, the annual inflation in June became negative, at -0.1 percent, for the first time on record, while industrial producer prices fell again in May, by 0.2 percent month on month. Producer prices are decreasing rapidly; the yearly growth rate was 5.9 percent in 2008, -1.7 percent in the first quarter of 2009 and -5.8 percent in May 2009.