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France April Industrial Output Grows Unexpectedly

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French industrial production grew unexpectedly in April driven by higher energy consumption due to relatively low temperature, while the decline in manufacturing output suggests that conditions remain weak.

Industrial production grew 1.5 percent in April from a month ago, data from the statistical office Insee showed Monday. The expansion was in contrast to the expected 0.1 percent drop, and followed the 1 percent decrease in March. The latest increase is the biggest since November 2010, when production grew 2.1 percent.

Output soared in the electricity, gas, steam and air-conditioning supply sector by 20.7 percent month-on-month, due to the harsh climate in April, following a very mild weather in March.

Meanwhile, manufacturing output dropped by 0.7 percent, partially offsetting March's 1.4 percent increase. Economists had forecast a 1.2 percent decrease for April.

Similarly, output for the industry as a whole climbed 0.4 percent sequentially during the last quarter, while manufacturing output dropped 0.7 percent.

Annually, the pace of decline in the manufacturing output worsened to 1.4 percent in April, in line with expectations, from 0.4 percent. On the other hand, industrial output rose unexpectedly by 0.9 percent, reversing the 1 percent decline seen in March. The expected rate of decline for April was 0.4 percent.

Production of transport equipment was down 2.2 percent from a month ago, and electrical and electronic equipment output dipped 0.2 percent. Partially offsetting these declines, construction output gained 2.3 percent.

According to the latest Purchasing Managers' survey, French manufacturing activity shrank to a 3-year low in May, reflecting weaker contributions from output, new orders, employment, stocks of purchases and suppliers' delivery times.

In the first quarter, gross domestic product logged no change after contracting 0.1 percent in the fourth quarter of 2011. The latest survey from the Bank of France signaled 0.1 percent GDP fall for the second quarter.

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