French industry outperforms neighbours,signals strong second quarter

10th August 2004, Comments 0 comments

PARIS, Aug 10 (AFP) - French industrial production data for June published Tuesday should presage solid second-quarter growth, but a sluggish labour market over the rest of the year is likely to dent the domestic demand that has so far underpinned output growth, economists said.

PARIS, Aug 10 (AFP) - French industrial production data for June published Tuesday should presage solid second-quarter growth, but a sluggish labour market over the rest of the year is likely to dent the domestic demand that has so far underpinned output growth, economists said.  

French industry outperformed its neighbours in June, posting a 0.2-percent increase in industrial production from May, in line with the consensus forecast, while the May figure was revised upwards to a 0.4 percent rise from 0.2 previously.  

"This growth is encouraging, at about four percent at an annual rate, confirmed the clear trend in the pick-up in the French economy, that should thus see growth of about 2.5 percent in 2004," said Henri Sterdyniak with the OFCE economics think-tank.  

The performance of French industry in June was in stark contrast to Italy, which Monday posted a decline in output of 0.7 percent compared with forecasts for a fall of just 0.1 percent.  

In Germany, seasonally adjusted industrial output data published Friday showed a drop a 1.9 percent in June from May, against original economists' forecasts for a 0.1 percent decline.  

France's relative strength implied sequential growth in the second quarter of 0.6 percent, accelerating from 0.4 percent for the first three months, and led economists to confirm their forecasts preliminary gross domestic product data.  

CDC IXIS, Morgan Stanley and Credit Agricole are all confident for 0.7-percent quarter-on-quarter growth while Exane BNP Paribas is looking for a rise of about 0.5 percent.   Sylvain Broyer at CDC though struck a note of caution, noting that growth in output had ridden on the back of demand within France, most notably for cars and consumer goods  

"We expect the support for domestic demand in France to weaken over the next quarters as the labour market will remain sluggish," she said.  

Analysts at Morgan Stanley argued that with auto production providing nearly a third of overall second quarter manufacturing output, "going forward, we look for a correction in the third quarter."  

Anne Beaudu at Credit Agricole noted that manufacturing output - which excludes food and energy - rose 1.3 percent in the second quarter, representing the best performance since the fourth quarter 2000 and auguring well for the GDP data.  

"This is looking very much like a recovery ... growth in France is maintaining its momentum," she said.

 

© AFP

Subject: French news

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