French industry sends mixed signals on recovery

PARIS, Jan 10, 2006 (AFP) – Industrial production in France rose 3.1 percent in November from October, the national statistics institute INSEE reported Tuesday, but analysts were reluctant to declare an end to the gloom hanging over the French manufacturing sector.

“To give oneself an idea of the situation for production (in France), one needs to look at the two months October-November together,” said an analyst at HSBC, Nicolas Claquin.

In October, industrial production had fallen by 2.8 percent compared to September, meaning the increase in November “goes no further than a simple correction”, Claquin said.

Nevertheless, the November gain surpassed market expectations of a rise of 2.5 percent and analyst Nicolas Bouzou of economics consultancy Xerfi was more upbeat.

“There is really a recovery underway in France, slow and chaotic, but real,” said Bouzou, adding that exports and a pick up in activity in Germany and Italy were the main reasons for the expansion in November.

Excluding energy and agro-industrial sectors, production was up 2.6 percent in November from October.

Output of consumer goods increased 0.7 percent, output of intermediate goods increased 2.1 percent, while production in the auto industry gained 7.1 percent, INSEE said.

An analyst at Natexis Banques Populaires, Marc Touati, said: “As has been the case since 2001, months of sharp increases continue to follow months of sharp falls.”

This is particularly prevalent in the French auto sector, which had reported a 9.0-percent fall in production in October.

“This extreme volatility is evidently because of a lack of visibility that industrial companies must confront,” added Touati, who said the problem was most acute in the auto sector where fluctuating demand has caused problems.

In the capital goods sector, production rose by 3.9 percent from October and by 3.8 percent in the electrical and electronic sector.

Resuming changes in French industrial production over 2005, Touati said that the increase would be only 0.1 percent.

The strong figures for November serve only to hide “more serious problems, in particular the decline in our competitiveness”, he said.

Subject: French news