French industrial production declined more than expected in May as it was weighed down by a slump in auto and energy production. May's fall was the steepest since October 2005.
The statistical office INSEE reported that industrial production decreased 2.6% month-on-month in May. At the same time, the statistical office revised April's monthly increase to 1.5% from 1.4%. May's decline was severe than a 0.6% fall expected by economists.
Manufacturing production that excludes energy and food dropped 2.5% on a monthly basis in May compared with 1.7% increase in April.
Decline was widespread in all industries in May. In the automotive industry, output recorded a steep decrease of 8%, following April's 3.7% rise. Energy output dropped 4.8%, after posting 0.9% growth in April. Meanwhile, production of producer-durable industries fell 1.1% and consumer-goods production slid 1.3%.
The Purchasing Managers' Index for the French manufacturing sector declined to 49.2 in June. The survey highlighted deterioration in overall business conditions during June. According to the Markit/CDAF survey, weak performance was led by contraction of incoming new orders.
Other major economies in the Eurozone also reported decline in production in May. Industrial production in the largest Eurozone economy had fell by seasonally adjusted 2.4% on a monthly basis in May, following a 0.2% fall in April. At the same time, Italian industrial production slid by seasonally adjusted 1.4% month-on-month, while consensus forecast was for a 0.5% decline.
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