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News: French Industrial Output Unexpectedly Fall In September (RTTNews) - French industrial and manufacturing output unexpectedly dropped in September, raising threats for an economy, which recovered in the second quarter from the worst recession. Industrial production fell 1.5% month-on-month in September after a revised 2.8% increase in August, statistical office Insee said Tuesday. Economists had expected a 0.5% growth for September. On an annual basis, industrial production fell 10.4% after a 10% decrease in August. Similarly, manufacturing output dropped 1.6% following upwardly revised 3% gain in August. That was forecast to rise 1.2%. Annually, the contraction was 11%. In the third quarter, industrial and manufacturing production increased by 2.9% and 3.3%, respectively compared to the preceding quarter. 'This record quarterly rise represents a dynamic pick up in industrial activity following the historic falls seen at the start of the year," French Finance Minister Christine Lagarde said in a statement. She said the situation in industry is improving due to the effects of emergency measures, especially in the automotive sector. However, she noted that the French industry is still going through a period of crisis and the government will continue stimulus measures in the coming months to boost industrial recovery. In September, car production dropped 7.9% after a 17.9% surge in August. The decline was the first in six months. Production of electrical equipment suffered 4.9% drop after a 2.3% rise in the previous month. Construction sector output saw a slight gain in September, by growing 0.1% month-on-month following a 1.8% fall. "The recovery in activity should remain strong in the near future, especially in sectors where output fell strongly last winter and where inventory adjustments were the most important," BNP Paribas Economist Frédérique Cerisier said. But, results of a separate survey conducted by the Insee showed that business managers downwardly revised their forecast for industrial investment. They now predict a 22% drop in 2009 compared with a previous forecast for a 21% fall. Investment in manufacturing industry is forecast to fall 24%. Survey participants also forecast further decrease in investment in 2010, though the pace of decline is expected to moderate. Investments are tipped to fall by 5% in the manufacturing industry and by 3% in all industries. The French economy exited recession in the second quarter of this year by expanding 0.3% sequentially after declines in past four quarters. The recovery was mainly led by massive government stimulus measures. The current fall in manufacturing output, especially in the automotive sector, raises skepticism about the sustainability of growth once the government withdraws stimulus. The Insee is due to release third quarter GDP data on Friday. Also on Tuesday, Italian statistical office Istat said seasonally adjusted industrial production dropped 5.3% month-on-month in September. Economists had forecast a decline of 4% after August's revised increase of 5.8%. That was the first fall in six months. A day earlier, official data showed German industrial production continued its recovery in September as orders continued to grow. |
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