Euro-zone industry faces severe price competitiveness constraints

When comparing trends in prices and unit labour costs in industry and services in the euro zone since the start of 2023, we see: At the start of 2024, much greater rises in prices in services than in industry, if we look at consumer prices, and greater rises in value added deflator s in industry than in services; Greater increases in unit labour costs in manufacturing industry than in services. This reflects: Fairly free pricing of services ; A price competitiveness constraint imposed on manufacturing industry, leading to a significant fall in industrial profit margins and, since industrial production costs are high, to a sharp fall in manufacturing production, with large market share losses to imported products. The euro zone's manufacturing industry cannot withstand the sharp rise in its unit labour costs.