FRANKFURT — Euro zone industry and trade took major hits in April, likely reflecting US tariffs announcements, challenging the view of economists that the bloc is holding up well in the face of economic turmoil.
Industrial production fell by 2.4 percent on the month in April, more than the already —weak expectations for a 1.7 percent fall in a Reuters poll of economists, as every segment within industry suffered a contraction, data from Eurostat showed on Friday.
Trade also suffered, with the surplus of the 20 nations sharing the euro falling to just 9.9 billion euros compared with the previous month’s 37.3 billion euros.
The weak figures are not unexpected as US firms frontloaded purchases in February and March in anticipation of the April 2 tariff announcement.
But the April reversal is larger than many had anticipated, indicating downside risks to economic growth forecasts, which are already below 1 percent for the year.
The euro zone’s exports to nations outside the bloc fell by 8.2 percent on the month, while figures for the broader EU showed a 9.7 percent drop, Eurostat said.
The EU’s total exports to the US, its biggest trading partner, totalled 47.6 billion euros in the month, well down on the 71.1 billion reported a month earlier, which included the frontloading and was itself considered unusually high.
The drop was mainly driven by sharply lower chemicals exports, likely relating mostly to pharmaceutical exports from Ireland, which hosts a number of international firms that are located there for tax reasons.
Irish pharmaceutical exports to the US surged in the months leading up to the tariffs, pushing up economic growth to exceptional levels.
The figures also explain why Irish industry contracted by 15 percent on the month, leading euro zone production lower.
