Industrial production in France remained unchanged in June, as factory activity continued to be subdued hurt by the euro area debt crisis and adds to the outlook that the second biggest economy may have slipped into recession in the third quarter.
Overall industrial production remained unchanged from May when it decreased 2.1 percent, which was revised from 1.9 percent, statistical office Insee said. Economists were looking for a 0.1 percent increase in June.
Manufacturing output edged up 0.1 percent monthly, while economists had expected it to remain flat. The pace of growth was the weakest since January, when output increased 0.2 percent. In May, factory output had decreased 1.1 percent.
The Bank of France forecast on Wednesday that the economy likely shrunk 0.1 percent in the third quarter. Last month, the bank said the economy may have contracted 0.1 percent in the second quarter after zero growth in the first three months of the year. Two consecutive quarters of contraction implies a technical recession.
Year-on-year, industrial production declined for the second straight month. Compared to June 2011, industrial production decreased 2.3 percent in June, slower than May's revised 3.7 percent fall. The rate of contraction, however, exceeded the 1.8 percent expected by economists.
Manufacturing production decreased at a faster rate of 2.6 percent year-on-year than 2.1 percent economists estimated. However, the result was better than the 4.6 percent fall in May. It was the sixth consecutive annual decline in factory output.
In the three months ended June, overall industrial production dropped 0.6 percent from the preceding three-month period. Year-on-year, production decreased 1.9 percent in the second quarter.
A recent survey by Markit Economics showed that business conditions across the French manufacturing sector deteriorated further in July. The sector contracted at the fastest pace in 38 months, with production declining for the fifth consecutive month.
Confidence among French businesses plunged to its weakest level in 29 months in July, mainly reflecting concerns about the regions economic prospects, separate data from Insee showed earlier.
by RTT Staff Writer
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