French manufacturing contracts again in June

Industrial production in France dropped sharply in July as output of machinery and equipment declined for a second consecutive month.

Total industrial production fell by 0.6% month-on-month, according to INSEE, as manufacturing output fell 0.3% and that from mining industries by 2.5%.

Economists had forecast a rise of 0.3%.

Construction output on the other hand expanded by 4.8% versus June.

Within manufacturing, output from refineries surged 40.4% over the month after strikes in May and June ended.

Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, described the fall in machinery and equipment production as "disappointing" following the 2.3% drop seen in the month before.

Transport equipment was also lower, slipping 1.4% after decreasing 1.7% in the month before.

However, Vistesen drew some comfort from the jump in construction sector activity, given the large multiplier effect from this sector to private investment.

"This is similar to the July story in Germany, which suggests that Eurozone private capex is doing better than implied by the poor industrial production and manufacturing data."

In year-over-year terms industrial production was down by 0.1%, recovering from a fall of 1.1% in the month before.

Vistesen pointed to recent survey data which in his opinion indicated that stabilisation, and even a slight rebound, lay ahead.