Autos Drag Back French Industry

Auto production fell 2.9% in June after falling 7.9% in May.

French industrial output fell sharply in May and June, data showed on August 11, raising a risk that overall activity in the second-biggest eurozone economy might have contracted in the second quarter.

The data, set against rapidly rising signs of sharp slowdown in the eurozone, showed that French industrial output fell by 0.4% in June from the May level, pulled back by weak auto production.

The INSEE data shows that industrial output in the whole of the second quarter fell by 1.4% from the level in the first quarter and by 0.2% from the equivalent figure last year.

Manufactured output alone, excluding production by the sectors of energy, and the food and agriculture industries, fell by 0.8% in June after a revised fall of 2.7% in May.

Production by the auto industry, which is substantial in France and is based mainly on PSA Peugeot Citroen and on Renault, continued to fall rapidly, by 2.9% in June after a fall of 7.9% in May.

Xerfi consultants, Alexander Law remarked that "we have not done worse since the fourth quarter of 2001", saying that this reflected policies by Peugeot Citroen and Renault to focus on production outside France, as well as "sluggishness in west European markets", and an environment tax on vehicles which were heavy on fuel consumption.

And the latest data showed that industrial output in May had slumped by 2.9% and not by 2.6% as calculated previously by the national statistics institute INSEE.

However, production of consumer goods, a mainstay of French growth, firmed by 0.5% after falling 1.5% in May.

Output of investment goods declined by 1% in June after falling 1.2% in May, and production of semi-finished goods fell by 0.4% in June.

Production of products in the chemical, rubber and plastics sectors fell by 2.4%, textiles by 0.5% and for wood products, paper and cardboard by 0.3%.

Copyright Agence France-Presse, 2008

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