Eurozone industrial output in June fell more than expected, while GDP continues to maintain growth

According to the Zhitong Finance APP, the Eurozone's industrial output in June fell more than expected, despite overall economic growth in the second quarter, challenging the mainstream view that "the 20-nation currency union can withstand the impact of the global trade war." Data from the European Union's statistics office on Thursday showed that industrial output fell by 1.3% month-on-month in June, worse than the expected decline of 1.0%, dragged down by a significant drop in Germany and weak production of consumer goods. Even more surprisingly, the agency revised the output growth for May down from 1.7% to 1.1%, suggesting that the underlying trend is weaker than expected. Meanwhile, the GDP growth rate for the second quarter was 0.1% month-on-month, in line with the initial estimate, while the employment rate increased by only 0.1% month-on-month, which was consistent with Reuters' survey expectations but lower than the previous quarter's growth rate of 0.2%. Recently, a series of relatively optimistic indicators, from the Purchasing Managers' Index (PMI) to the European Commission's confidence index, had supported the argument that "consumer resilience protects the Eurozone from trade tensions," but new data on industrial orders and Germany's key confidence index have called this into question. However, investors are still betting on a moderate recovery, as the recent trade agreement between Europe and the United States provides certainty, and Germany's significant increase in budget spending plans will support growth. This explains why financial markets believe the European Central Bank may pause interest rate cuts—despite inflation temporarily falling below the 2% target, medium-term price pressures are building. However, constrained by structural issues, the Eurozone economy is unlikely to improve significantly, with future annual growth rates expected to remain around 1%, lagging behind other major economies. Year-on-year, the 1.4% economic growth in the second quarter was driven by a surge in demand before the implementation of U.S. tariffs. This indicator is expected to steadily slow down, with a potential rebound not anticipated until 2026. The monthly decline in industrial output was mainly due to the drag from Germany (-2.3%) and Ireland (-11.3%), but the latter's data showed abnormal fluctuations due to tax operations by multinational pharmaceutical companies, limiting its actual reference value. Segmented data shows that all sectors, except for energy production, experienced contraction last month, with non-durable consumer goods (-4.7%) and capital goods (-2.2%) leading the decline