European Economic Outlook: Manufacturing Recovery Stalls but Consumers Earn More, Spend More

Kris Bledowski, director of economic studies, says the European economic recovery is proceeding slowly and the sources of growth are more balanced than in the past. Despite low interest rates, capital formation has stalled. It’s being depressed by renewed worries about Greece and the stability of the financial sector. Exports to selected Asian and South American markets have cooled.

In contrast, the consumer has stepped up to the plate and output of consumer products is on an upswing. It is catching up fast with capital equipment, which is the traditional European strength. The growth rate of production of investment goods is slowing while that of consumer products is accelerating. Both categories are now growing at a 2-3% clip. We forecast manufacturing production to advance 2% this year and about 2.5% in 2016 in the Eurozone and a bit faster in the European Union of 28.