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French Manufacturing Output Drops as Euro Recessions Hurt Demand

June 11 (Bloomberg) -- French factory output fell for the fourth month in five in April as recessions in at least six European countries weighed on demand and raised the risk that France will have its first quarterly contraction in three years.

Manufacturing production declined 0.7 percent, leaving output in the three months through April down 1.8 percent compared with a year earlier, Paris-based national statistics office Insee said today. The figure was in line with that predicted by a Bloomberg News survey of seven economists.

The drop is the latest indication that Europe’s second-largest economy after Germany is suffering from stagnant demand in its main export markets as neighbors such as Italy and Spain suffer recessions induced by the region’s sovereign-debt crisis. Any gross domestic product shrinkage would pose a challenge to President Francois Hollande, who won office last month on a pledge to revive growth.

“This paints a dire picture of the French economy that is clearly linked to a renewed intensification of the euro crisis,” said Joost Beaumont, an economist at ABN Amro in Amsterdam. “Hollande is between a rock and a hard place.”

Today’s report comes after the Bank of France said last week that sentiment among French factory executives slipped in May, suggesting the economy will shrink 0.1 percent in the second quarter.

The GDP drop “could be quite modest” because industrial production, which includes electricity generation, increased 1.5 percent in April, Beaumont said. “It should still happen.”

To contact the reporter on this story: Mark Deen in Paris at markdeen@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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