French Industrial Production Recovers In July
France’s industrial production rose in July, led by a rebound in manufacturing, preliminary data from the statistical office INSEE showed Friday, though the momentum is unlikely to be sustained in the coming months amid weakening demand globally and high interest rates.
Total industrial production rose 0.8 percent from June, when output fell 0.9 percent. Economists had forecast a modest 0.1 percent growth.
Manufacturing output grew 0.7 percent after a 1.1 percent decline in the previous month, which was revised from 1.0 percent. Within manufacturing, production of transport equipment rebounded in July with a 0.8 percent growth.
Recent purchasing managers’ survey data from S&P Global showed last week that the manufacturing sector remained in contraction territory amid a steep fall in demand that led to further deterioration in production, employment and business confidence.
Cost pressures continued to weaken and producers lowered the prices charged amid rising competition, the PMI survey showed.
ING economist Charlotte de Montpellier said the rebound in industrial production in July is good news for third-quarter GDP along with the recovery in household consumption of goods and the boost from the very good tourist season in France this summer.
“Today’s data therefore suggests that French GDP will not contract in the third quarter,” the economist said.
However, strong growth over the quarter is unlikely and the following quarters are likely to be synonymous with virtual stagnation, de Montpellier added.
The second largest euro area economy grew 0.5 percent sequentially in the second quarter after logging nil growth a quarter ago.
ING expects France’s GDP growth to average 0.8 percent this year and 0.6 percent next year.
This projection is much lower than the very optimistic assumption of 1.4 percent for GDP in 2024 on which the government based its 2024 budget, the economist said.
The group combining mining and quarrying, and utility sectors also recovered logging a 1.2 percent increase in output, INSEE data revealed.
Construction output grew 0.6 percent after a 2.6 percent decline in the previous month.
Among the main industrial groups, production of consumer durables continued to fall, while manufacture of intermediate goods, energy and non-durables recovered. Capital goods production grew at a faster pace.
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