French Industrial Output Unexpectedly Falls on Carmakers

French industrial production unexpectedly fell for a third month in July, suggesting growth in Europe’s second-largest economy may slow in the current quarter.

Industrial output declined 0.6 percent from the previous month, when it dropped 1.4 percent, national statistics office Insee in Paris said today. Economists had forecast a 0.5 percent gain, according to the median of 22 estimates gathered by Bloomberg News. Automobile output plunged 11.2 percent.

The drop indicates that French growth has yet to fully recover after exiting recession in the second quarter. The 0.5 percent growth in gross domestic product in the three months through June may not be repeated in the following period.

The figures “send strong negative signals for third-quarter GDP,” said Fabrice Montagne, an economist at Barclays Bank Plc in Paris. “The upside potential in coming months remains limited.”

Today’s industrial data is at odds with recent surveys indicating manufacturing and confidence are starting to recover.

Sentiment among factory executives rose to 97 in August from 95 in July, while sentiment in the service industry climbed to 93 from 91, the Bank of France said yesterday. The increases prompted the central bank to raise its growth forecast for the third quarter to 0.2 percent from 0.1 percent.

The “industrial production data should not be seen as a sign that the French economy is heading towards another leg of recession,” Annalisa Piazza, an analyst at Newedge Group in London. “That said, we need to be prepared for a bumpy recovery ahead.”

Today’s report also showed that manufacturing output fell 0.7 percent in July from August and dropped 2.5 percent from a year earlier. Total production declined 1.8 percent on the year.

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