The European Commission issued a report on the 19th that EU manufacturing output in the second quarter of this year was flat compared with the first quarter. The pace of recovery of the manufacturing industry slowed down significantly, and the recent decline in corporate confidence indicates that growth will not improve in the second half of this year.

The report said that the EU’s manufacturing output was affected by the disruption of supply caused by the Japanese tsunami, and that the high prices of energy and other imported products and the fiscal tightening policies implemented by some member countries have affected the pace of recovery. However, the report also emphasized that manufacturing output still increased by 4.5% compared with a year ago. Although it was still 8% lower than the peak period in early 2008, it was still 19% higher than the lowest level in early 2009.

The report shows that in all sectors, the electronic, mechanical and engineering sectors have enjoyed the fastest growth, while the production of intermediate products has seen a significant decline. At the same time, the EU’s external exports have returned to their peak levels, but intra-EU trade growth and demand as well as private consumption remain sluggish, lagging significantly behind growth in emerging countries.

Antonio Taiani, the European Commission’s deputy chairman of industrial affairs, said that the overall situation in the industrial sector in the European Union is still better than before the crisis, and Germany and France in particular have performed well in July. However, given the slowing pace of recovery, EU countries should continue to stimulate the potential of industrial sectors and SMEs through structural reforms to promote growth and increase competitiveness.