French industry still suffering chronic weakness

9th June 2006, Comments 0 comments

PARIS, June 9, 2006 (AFP) - Weak French industrial output data published on Friday underscores production weaknesses which have been creeping up for about two years, some analysts say.

PARIS, June 9, 2006 (AFP) - Weak French industrial output data published on Friday underscores production weaknesses which have been creeping up for about two years, some analysts say.

Official figures pointed to a widening trade deficit and falling output in the auto and energy sectors.

Seasonally-adjusted industrial output fell by 1.4 percent from March, when it had increased by 1.6 percent on a monthly basis, figures from the national statistics institute Insee showed.

In February, industrial production had dropped by 1.2 percent.

Automobile production fell by 1.8 percent in April, following an increase of 1.5 percent in March, while energy output plunged by 5.7 percent, wiping out a 2 percent rise the previous month.

The French trade deficit grew meanwhile to EUR 2.286 billion from 1.827 billion.

Increased imports outstripped a rise in exports that included the sale of 25 Airbus airliners for EUR 1.428 billion and "massive" deliveries of portable telephones to Poland and Spain, the customs service said.

Two Boeing jets worth EUR 259 million were imported however, and consumers increased purchases of electronic goods such as televisions ahead of the soccer World Cup that kicked off Friday in Germany.

Energy imports eased slightly but their value nonetheless remained above 5.0 billion euros, the customs service said.

Imports of automobiles and spare parts, in particular from Turkey and Spain "continue to increase regularly", it added.

In the 12 months to April the trade balance showed a cumulative deficit of EUR 24.54 billion, an "historic" level noted Alexandre Bourgeois at Natexis Banques Populaires.

He pointed out that over the same period the world's biggest exporter Germany had notched up a trade surplus of EUR 155.7 billion.

At the Xerfi economic institute, Nicolas Bouzou said: "It's simple, since mid 2004 industrial production has basically not increased in France.

"French industry has largely missed out on the latest growth cycle."

At HSBC, Nicolas Claquin added: "It is confirmed that the French industrial sector is not the heavy lifter in terms of growth, it has destroyed jobs for several years and its level of production has stagnated for several months."

He cited the strong level of the euro which hampers exports, high energy prices and monetary conditions that have begun to tighten among the principle problems.

But Claquin also noted that household consumption, long a pillar of the French economy, focused more and more on imported goods.

At BNP Paribas, analyst Mathieu Kaiser was more optimistic, saying that French industry had begun to catch up in the current cycle of economic expansion and that it could pick up through the northern hemisphere's summer.

Bourgeois warned that more volatility could be in order however, noting that industrial output figures have not been this volatile since the economic "air pocket" of late 1997 and early 1998.

Copyright AFP

Subject: French news

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