French Factories Suffer Worst Quarterly Output Drop Since 2012

(Bloomberg) -- French manufacturing suffered its worst quarterly drop since 2012 in the first three months of this year, underscoring a loss of momentum experienced in the euro region.

The 1.8 percent slump from the fourth quarter was the first decline in more than a year, according to Bloomberg calculations from the French statistics agency’s index. The wider measure of industrial production in Europe’s second-biggest economy fell 1.3 percent. That was the largest since the third quarter of 2013.

The figures add to a general picture of weakening in the region that European Central Bank President Mario Draghi described two weeks ago as “moderation” after a period of strong growth. Expansion in both France and the euro zone was the weakest in six quarters at the start of the year.

“The data confirm that the euro zone economy has simply slowed sharply,” said Claus Vistesen, an economist at Pantheon Macroeconomics in Newcastle, England. “Whatever growth we had in 2017 was never going to be sustained.”

France’s gross domestic product weakened to 0.3 percent in the first quarter due to winter storms that ripped through the country, hitting factory production. That number may now be 0.1 or 0.2 percentage point lower, Vistesen said. A second reading is set to be published at the end of this month.

Read next: France React: Growth Hit by Weather, Labor Action to Strike Next

Data elsewhere in euro region this week has been mixed. German production showed a 1 percent increase for March, though factory orders for the same month unexpectedly fell. Italy will release industrial data for March on Thursday, while the euro zone aggregate will be published next week.

To contact the reporters on this story: Angeline Benoit in Paris at abenoit4@bloomberg.net, Harumi Ichikura in London at hichikura@bloomberg.net.

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Craig Stirling, Zoe Schneeweiss

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