French Industrial Production Disappoints

There is little sign of recovery in the latest data from France:

Industrial production in France, Europe's third-largest economy, unexpectedly declined in November, snapping two months of gains as makers of consumer goods and cars reduced output.

Production fell 0.4 percent from October, when there was a revised 0.8 percent gain, the Paris-based statistics office said. Economists had expected a 0.1 percent increase, according to the median of 23 forecasts in a Bloomberg News survey.

The drop in French production contrasts with a 1.3 percent increase in Germany, Europe's biggest economy, in the same month and suggests growth in France may have slowed in the fourth quarter. Both exports and imports declined in November, the customs department said today. The drop in imports indicates that demand within France may be faltering.

``Consumer spending hasn't shown any signs of taking off, investment hadn't picked up at the end of 2003, and while exports are being helped by global economic growth, the euro is holding them back,'' said Ernest-Antoine Seilliere, president of Medef, a Paris-based employers' federation representing more than 700,000 companies.

Both France and Germany are recovering from a first-half slump as global growth accelerates. France's economy will probably grow 1.7 percent this year after 0.2 percent expansion in 2003, Medef predicts. Germany's government forecasts growth of between 1.5 and 2 percent this year after a third year of stagnation in 2003............

In France and Germany, there are few signs of a recovery in consumer demand at a time when the euro's appreciation against the dollar threatens to slow export growth. Consumer spending accounts for more than half France's gross domestic product and declined the most in seven years in November.
Source: Bloomberg