French industrial output unexpectedly declines, with weakness in manufacturing signaling an economic slowdown

⑴ Data released by the French National Institute of Statistics and Economic Studies on Wednesday showed that industrial output in July fell by 0.4% month-on-month, significantly below market expectations of a 0.2% increase. The previous value was revised downward from a 0.1% decrease to a larger decline, indicating a weakening marginal momentum in the real economy. ⑵ In terms of sub-sectors, manufacturing output declined by 0.8% month-on-month. Although this is slightly narrower than June’s 1.0% decline, nearly all major manufacturing branches recorded negative growth. Only the coke and refined petroleum products sector saw gains against the trend, reflecting that the rebound in energy prices is squeezing some downstream industries. ⑶ The mining, energy, and water supply sectors performed notably well, growing by 0.9% month-on-month. Although this is a substantial slowdown from the previous 3.2%, output levels still reached a new high since November 2021, partly offsetting the deep downturn in manufacturing. ⑷ According to the rolling three-month data as of July, total industrial output grew by 0.8% year-on-year. However, over the same period, manufacturing output still declined by 0.4%. Going forward, attention should be paid to whether persistently high energy costs will further dampen production willingness among enterprises and whether manufacturing order data can provide support for a recovery by year-end.