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EU industrial structure 2011 — Trends and Performance
Executive summary
The impact of the latest crisis on EU sectors was much
stronger than previous ones since 1990.
The sectoral impact of the latest financial crisis is more
significant because of the larger size and scope of the
downturn. The latest recession lasted 17 months before
industrial production began to pick up. In comparison,
the 1992‑93 recession lasted 19 months before
production recovered from the trough; the millennium
recession 13 months. Nonetheless, growth rates fell much
more drastically in the recent crisis than in the 1992‑93 and
millennium downturns.
It is still too early to determine how long it will take to
reach pre‑crisis production levels. But it is clear that the
latest recession was much deeper than the previous ones.
Manufacturing production in the EU‑27 took some two and
a half years to regain its pre‑recession production level after
the 1992‑93 crisis. The millennium recession was milder
but the recovery process lasted longer, about four and
a half years. Judging from the latest available data, it may
take more than four years before the pre‑recession peak is
regained.
Looking more closely at the sectoral impact of the crisis,
the total number of affected industries is unprecedented
in comparison with previous downturns since 1990.
The impact has been uneven across sectors. Capital
goods, durable goods and intermediate goods were
hit harder than non‑durable consumer goods. The fall
in production for total industry was significantly larger
than for services. Services sectors have been generally
less sensitive to the crisis, displaying higher growth rates
and lower volatility.
In early 2011, production levels for non‑durable consumer
goods’ industries were close to the pre‑recession peak
while durables and intermediates still were well below
the pre‑recession levels. At a more disaggregated level,
the industries producing motor vehicles, basic metals and
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machinery n.e.c. experienced larger declines in production
than other manufacturing industries.
The trough of the crisis can be identified as early 2009 in
most industries in the EU, the US and Japan. The first signs
of recovery seemed to have appeared in the beginning
of 2011. Early 2011 business survey data (order book levels,
stocks of finished products), indicated increasing growth
across manufacturing. Nonetheless, growth in some EU
sectors still seemed more fragile in early 2011, namely
furniture, mining and quarrying and tobacco.
The latest developments during the summer of 2011 have
increased the uncertainty of how sustainable the recovery
process is. Increasing uncertainty about the sustainability
of public finances which deteriorated during the recession
may give rise to wealth effects and reduce consumption and
investments. Measures to tackle public debt problems in
the US and several Member States risk affecting directly and
negatively consumption and investment as well. The latest
available data (June and July 2011) on short‑term statistics
shows a decrease in EU‑27 industrial production. Business
surveys on production expectations, orders and inventories
point in the same direction. It is still too early to judge
whether the latest developments indicate a slowdown or if
the economic activity will pick up again.
The developing services economy
Services sectors occupy increasingly larger shares in the
EU Member states. Market services have grown to 50 % of
the EU economy in 2009, from 46 % in 1997; non‑market
services have risen to 24 % from 22 %. Over the same time
period, the share of EU manufacturing dropped from 20 %
to 15 %. A shrinking EU agricultural sector went down to as
little as 2 % of the EU value added in 2009 from 3 % in 1997.
With the exception of Malta, all EU countries have seen the
share of market services activities increase since 1997. But
these EU‑wide developments hide large differences among