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Julien Manceaux, senior economist at ING, notes that French industrial production fell by 0.9% in August, with manufacturing falling back by 0.8%.

Key Quotes

“On the year, the drop reached 1.6%, its lowest so far in 2019. Good numbers in July failed to stabilise the following month, meaning that 3Q19 will probably be negative after two quarters of growth. Indeed, the strong rebound in investment goods production (+0.9% in July) was not repeated.”

“Year-on-year, investment goods production has even been declining for three months, signalling that lower corporate investment figures could show up in GDP data in the second half of this year. Moreover, despite the fact that purchasing intentions are at their highest this year in consumer surveys, durable consumption goods production was still declining in August, by 3.2% on the month. Only construction activity increased in August (+0.3%) after the sharp 2.7% contraction registered in July, limiting the drop in industrial production.”

“Consumer goods production, which rebounded significantly in 2Q19 (+3.7% QoQ) after the “yellow vest” crisis and three very weak quarters, declined by 0.8% in July. The fact that the French automobile sector is in better shape than in Germany, where the impact of slowing world trade is felt harder, undoubtedly helped industrial production in recent months. It is still well above last year’s levels and seems to have recovered from the summer 2018 changes in emission norms.”