French industrial production falls back in February

French industrial production fell back in February, surrendering most of the previous month's gains, possibly heralding weaker economic momentum for the Eurozone as a whole in the second quarter, according to some economists.

Industrial output shrank by 1.0% month-on-month, according to INSEE.

Economists had pencilled in a fall of 0.4%, while the previous month's reading was revised lower, from a rise of 1.3% over the month to 1.0%

Factory output, which accounts for 80.0% of the overall index according to broker BNP Paribas, decreased 0.9% month-on-month while energy sector output declined by 1.6%.

"Survey data such as the PMI orders-to-inventory ratio or the own production expectations from the Insee Survey suggest industrial output also remained weak in March. This means French industrial production might have contracted by more than 0.5% q/q in Q1, after rising by 0.6% q/q in Q4 2014," BNP Paribas's Clemente de Lucia pointed out in a research note sent to clients.

Althought industry accounted for just 14.0% of value added in French gross domstic product, it was a bellwether for other sectors, he said.

In the first quarter of 2016 at least, strong German industrial production was expected to offset weakness in France, but further near-term moderation in euro area industrial production was likely, De Lucia said.

"If industrial production continues to moderate in near term, as we expect, the sector will enter the second quarter of the year on a soft note and this loss of momentum will weigh on the Q2 growth rate."

BNP Paribas's forecasts called for the Eurozone's gross domestic product to expand by 0.4% quarter-on-quarter over the three months to the end of March 2016.