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French Industrial Production Declines 0.6% in July, Forecast Looks Weak

French industrial production fell more than expected in July, declining 0.6% after a 1.4% drop in June. This was a surprise, as economists had expected a 0.5% increase in July.

Released Monday, September 16, 2013

French Industrial Production Declines 0.6% in July, Forecast Looks Weak
Researched by Industrial Info Resources (Sugar Land, Texas)--French industrial production fell more than expected in July, declining 0.6% after a 1.4% drop in June. This was a surprise, as economists had expected a 0.5% increase in July. The manufacturing output declined 0.7%, after a 0.4% drop in June. According to data from national statistics office Insee, this is the third consecutive month of decline, which brings the yearly rate to 1.8%.

In terms of sectors, the drop was almost exclusively driven by transportation equipment (automobile manufacturing), which fell 6.7% from the previous month and contributed a 0.6-point drop to the overall index. The aggregated contribution of the other sectors is minimal, with mining, electricity, coke and refining marginally down, while food and beverage, computer and electrical increased marginally, and other manufactured products were flat.

The figures were a negative forecast for the coming quarter of the French economy, which experienced a recession in the second quarter with a rate of 0.5%, the most since the first quarter of 2011.

"July print is the second weak print in a row after solid increases seen in the second quarter," said Fabrice Montagne, an economist at Barclays Capital. "As a result, the carryover into the third quarter is now close to -2% and sends strong negative signals for the coming period, indicating that some of the upside surprise seen in the second quarter will be taken back in the third quarter. The upside potential in coming months remains limited. In addition to increased volatility, however, this would not be incompatible with our view that growth will remain only marginally positive on average throughout the year and only increase next year."

French Finance Minister Pierre Moscovici said on Wednesday that the economy may grow 0.1% in 2013. In a televised press release, he also said that next year's growth will accelerate to only 0.9%, instead of the 1.4% that was previously forecasted.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
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