French industry ‘in recession’
PARIS, June 10 (AFP) - French industry continued to flag in April on falling demand for energy for heating, and analysts say the overall climate for growth targets this year is gloomy as the new government turns its guns on unemployment.
Official data showed that industrial output fell in April by 0.3 percent compared to figures in March, the second monthly contraction in a row following a 0.3-percent fall reported in March from February, mainly caused by declining energy sector production.
At Natexis Banques Populaires, economics analyst Marc Touati said: “Now, it is a fact: French industry has gone into recession.”
However, the official, seasonally adjusted data from the INSEE statistics office showed that manufactured output grew by 0.5 percent, an increase coming on the heels of a 0.7-percent jump in March.
But Touati also commented that this increase did not compensate for a fall of 1.9 percent in the previous two months.
At BNP Paribas, analyst Jean-Marc Lucas commented that the recent trend did not point towards recovery of growth in the second quarter.
“Recent developments in industrial productivity do not suggest that gross domestic product will increase in the second quarter,” he said. “Growth risks finishing at slightly less than 1.5 percent this year, a rate normally insufficient to beat back unemployment.”
A new French centre-right government was appointed this week following French rejection of the European Constitution. The vote was widely interpreted as expressing exasperation with some structural reforms of the economy and a perception that living standards are stagnating.
There is also deep public concern about high unemployment which successive governments have been unable to treat for years. The new administration has given itself 100 days to make an impact, but is constrained by heavy state overspending and slowing growth.
Several analysts noted that the slowdown shown in the latest industrial data reflected mainly a seasonal fall in energy needed for heating, but also commented that other recent data has not been bullish for growth.
Xerfi finance house chief economist Nicolas Bouzou said that the situation “is less serious than it seems”, pointing to moderate growth in the consumer goods and automobile sectors.
Energy sector production fell by 4.8 percent in April and textile output by 2.7 percent percent.
But automobile industry output rose by 0.7 percent, output by the construction sector grew by 1.6 percent, consumer goods production by 0.7 percent, semi-finished goods by 0.4 percent, and electronics by 0.5 percent.
Bouzou said that the automobile and aeronautical sectors seemed set to underpin manufacturing during the year.
From February to April, industrial production dipped in volume by 0.6 percent compared to figures from the previous three months, and manufactured output fell by one percent.
Subject: French News