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French Industrial Output Drops as Hollande Aims to Revive Growth

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May 7 (Bloomberg) -- French industrial output fell in March as President Francois Hollande struggled to keep Europe’s second-largest economy from falling into recession for the third time in four years.

Production dropped 0.9 percent after climbing a revised 0.8 percent in February, national statistics office Insee said in Paris today. Economists forecast a 0.3 percent decrease, according to the median of 23 estimates in a Bloomberg News survey.

France’s economy remains under pressure from a domestic budget squeeze and weak euro-area demand at a time when President Francois Hollande is trying to revive economic growth and his own slumping popularity. At the same time, business confidence is weakening.

“Business surveys continue to point to a contraction in industrial activity,” said Pierre-Olivier Beffy, chief economist at Exane BNP Paribas in London. “Investment is due to decline further given poor confidence and low corporate margins.”

In France, confidence among manufacturing executives fell to 88 in April from 91 in March, according to Insee.

With joblessness at a record 3.22 million after the economy shrunk in the fourth quarter, Hollande is trying to trim the budget deficit and revamp the economy without further damaging growth.

The European Commission last week said that Hollande needs to make overhauling France’s labor laws and the pension system a priority. The Commission said last week that it expects the French economy to shrink 0.1 percent this year and allowed Hollande’s government more time to eliminate its budget deficit.

For France “it is very obvious that it is more reasonable to have an extension of the correction of the excessive deficit over two years,” Economic Affairs Commissioner Olli Rehn told reporters in Brussels May 3.

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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