France posts second straight month of growth in June

10th August 2005, Comments 0 comments

PARIS, Aug 10 (AFP) - Industrial production expanded in three European Union member states in June, with output in France showing its second consecutive month of growth, data showed on Wednesday.

PARIS, Aug 10 (AFP) - Industrial production expanded in three European Union member states in June, with output in France showing its second consecutive month of growth, data showed on Wednesday.

French national statistics office INSEE said industrial production in France, the second biggest economy in the eurozone, had grown by 0.3 percent in June after a 0.1 percent rise in May.

Elsewhere, data in the Netherlands showed a 0.4-percent increase in industrial output in May-June from March-April, and industry in Denmark expanded by 3.0 percent in June after growing by 1.1 percent in May.

An economist at Paris-based consultancy Xerfi, Nicolas Bouzou, said the figures in France were encouraging, implying hopes for an acceleration of growth in the second half were founded.

"Once more, a little sign of a slight improvement in the economic climate in France," he said.

"The foundations for a slight acceleration of the French economy in the second half have been laid: sentiment in industry has improved since June and the euro has lost ground against the dollar since the start of the year (about nine percent)."

The latest data came amid a series of surveys and macroeconomic indicators pointing to improving sentiment in the European economy and a pick-up in activity.

Last week, the Organisation for Economic Cooperation and Development predicted that weak growth would remain a feature in industrialised economies, but said there were signs of light ahead for Europe.

The OECD said leading economic indicators for the 12-nation eurozone bloc had begun to give positive signals -- reversing an 18-month trend of decline -- with the notable exception of Italy.

The Italian economy fell into recession in the first quarter of the year, and data on Monday showed that industrial production had contracted by 2.9 percent in June.

Some economists remained cautious, counselling prudence when assessing the prospects for the European economy, particularly in France.

Growth in French gross domestic product is not expected to surpass 1.5 percent in 2005.

"Even though we'd like to believe in the return of optimism about French growth -- and various government ministers are doing everything to help us think that -- the reality of the statistics is a wake-up call," said Marc Touati, an economist at Natexis Banques Populaires.

He said that overall French industrial output had declined by 0.5 percent in the second quarter, after stagnation in the first quarter.

"Let's not fool ourselves: industry is in a bad state," he said.

He warned of the vulnerability of the French economy to shocks from outside that could smother the first signs of growth.

"The slightest upset -- a rise in the euro, the price of oil above 60 dollars in the long-term, or social conflict in September -- could be fatal," he said.

"And sadly, the risks of the recent pick-up being choked off are increasing dangerously, mainly because of the inopportune rally in the euro and the price of oil," he added.

Copyright AFP

Subject: French news, French economy, industrial production

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