PARIS — French industrial production dropped for a second straight month in June, statistics bureau Insee said Wednesday, alarming analysts who had been looking for a modest increase.
Output fell 0.8% in June, after dropping 0.5% in May, with oil refining posting the largest single decline after strikes in France’s oil industry. Manufacturing output alone fell 1.2% in June after a revised 0.1% increase the previous month.
Connor Campbell, an analyst at Spreadex, called the latest French reading “alarming” and “far worse” than the May drop and the 0.3% increase that economists had been expecting for June.
“A stronger than expected fall in June industrial production ends the second quarter with another bad surprise for the French economic outlook,” said Olivier Vigna, an economist at HSBC. “The broad-based decrease in industrial output, again fuelled by unions’ strikes, raises some questions on the strength of the French recovery,” he said.
Stoppages at French refineries in early June in protest at a new French labor law pushed output in the refining and coking sector down by a massive 12.4%, Insee said. The food, transport and capital goods sectors also all saw declines.
Energy and water extraction was one of the few bright spots in the data, rising by 1.9%. For the second quarter as a whole, industrial production was down by 0.1%.
Copyright Agence France-Presse, 2016
EON, Energy Producers Drag Down European Stocks
European shares slipped for the first time in six days, led by declines in utilities after EON SE earnings and energy producers.
EON sank 6.4% as it reported a first-half loss because of charges linked to the listing of its Uniper unit. Peer RWE AG fell 3%. Royal Dutch Shell Plc and Tullow Oil Plc helped drag down energy companies as oil prices declined.
The Stoxx Europe 600 Index slipped 0.3% at 12 p.m. in London, trimming a decline of as much as 0.4%. The volume of shares changing hands was about a third lower than the 30-day average. Germany’s DAX Index, which entered a bull market on Tuesday, dropped 0.5%, weighed down by EON and exporters such as Thyssenkrupp AG as the euro strengthened.
“The earnings season hasn’t been spectacular, the oil price has gyrated again,” said Ben Kumar, an investment manager at Seven Investment Management LLP in London. His firm manages 10 billion pounds ($13 billion). “It’s enough, if you’ve made money, to go back to sit on the sidelines and not quite enough to get you back into the market yet. It’s not been a particularly loved rally.”
In the past five days, fresh Bank of England stimulus measures, better-than-forecast jobs data in the U.S. and corporate earnings helped the gauge of European equities rebound 12% from its low following the U.K. vote to leave the European Union through Tuesday’s close. Yet it’s still 0.7% away from its June 23 level, while U.S. and Asian stocks have already recovered.
Equity gauges of most western-European markets fell on Wednesday, with all but one Stoxx 600 industry groups falling. France’s CAC 40 Index dropped 0.3%, while the U.K.’s FTSE 100 Index declined 0.2%.
By Justin Villamil, Bloomberg