French Car Sector Weakness Hits Industrial Output

Auto sector fell 2. % in May, 7.4% over past year.

French industrial production rose slightly in May, official data showed on July 10, but analysts said the sector was being dragged down by weak car manufacturing activity which fell 2.1% in May.

An analyst at the Xerfi economics consultancy, Alexander Law, said production by the auto sector had fallen 7.4% over 12 months "which is not far from being disastrous."

Statistics agency INSEE said industrial output in May had risen by 0.4% compared with April after a fall of 1% in April compared with March.

Analysts welcomed the correction in May, but they said the French industrial sector was suffering, with one even suggesting a recession could be underway. "France is perhaps suffering from an industrial recession at the moment," said analyst Nicolas Bouzou from Asteres, an economics consultancy. Bouzou forecast growth for the industrial sector of 1% over the year, with growth of the whole economy predicted to reach 1%-2%.

Elsewhere in Europe, Italian industrial production gained 0.9% in May from April after a fall of 0.5% in April. In Greece output in May was stable compared with April and 0.3% higher over 12 months, while in Sweden output grew 0.4% compared with April and 3.6% over 12 months. But in the Netherlands, output fell 2% in April-May compared with February-March. Over 12 months, output increased by 2% in May.

Copyright Agence France-Presse, 2007

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