Industrial production continues to decline in France

2023-12-05 11:33:00

The situation is not improving for French industrial production. It fell once more in October over one month, by -0.3%, INSEE announced this Tuesday, November 5. However, this is less than the -0.6% in September, data which was revised downward by 0.1 point. On the other hand, manufacturing production increased slightly by +0.1%, following -0.6% the previous month (a figure also revised downward by 0.2 points).

Industrial production is falling once more, a sign of a “weakening of the French economy”

Thus in October, production decreased once more in the extractive industries, energy, water (-2.6%). It also fell in “other industrial products” (-0.3%), capital goods (-0.5%) and even coking and refining (-4.2% while it had increased +6.9% in September). On the other hand, it rebounded in transport equipment (+2.5% following -4.4%): thus, it recovered significantly in the automobile industry (+9.0% following -6.4%), but decreases once more in other transport equipment (-1.8% following -3.0%). It also increased over one month in the agri-food industries (+0.6% following -1.7%).

The fact remains that, over one year, production is up significantly in the extractive industries, energy, water (+4.9%), transport equipment (+6.0%) and capital goods (+2. 5%). It also increased sharply in coking-refining (+31.6%), due, specifies INSEE, to the strike movement which affected refineries in October 2022. It only decreased in “other industrial products” (-2.0%) and the agri-food industries (-3.2%).

Production weighed down by energy costs

INSEE points out that “in the context of high electricity and gas prices charged to companies taking into account the contracts negotiated in 2022 for 2023”, energy-intensive branches are particularly exposed to the increase in their production costs, and this is “likely to weigh on their production”.

The production of the last three months (from August to October) remains thus “clearly down compared to that of the second quarter of 2021”, which was the last quarter before energy prices rose sharply. This is particularly marked in the steel industry (-20.1%), the manufacture of pulp, paper and cardboard (-19.5%) and basic chemicals (-12.7%).

Private sector activity contracts further in November

This Tuesday, S&P Global and the Hamburg Commercial Bank (HCOB) published the PMI index reflecting private sector economic activity for the month of November. It turns out that it finally stagnated compared to October since it actually stood at 44.6 during these two months. In its first estimate at the end of November, the indicator was set at 44.5.

The fact remains that if this stability from one month to the next is good news, this figure indicates that activity nevertheless contracted over the whole month. Indeed, an index above 50 shows an expansion of activity while a figure below this threshold indicates a contraction. And this is also the sixth consecutive month that it has contracted, reaching its lowest level in almost three years in September (at 44.1).

The data from this survey highlighted according to S&P Global and the HCOB “a clear deterioration in demand across the private sector, with the overall volume of new business having recorded its sharpest decline in three years.”

(With AFP)