French Industrial Output Soars in Bright Spot for Euro Zone

(Bloomberg) -- French industrial output surged in May, indicating the euro area’s second-largest economy resisted a downturn in manufacturing in the currency bloc.

Industrial production jumped 4% from a year earlier, the most since 2017 and beating even the most optimistic prediction in a Bloomberg poll of economists. The monthly number was the best reading since 2016. In Italy, production rose 0.9% on the month, topping the median estimate, though it was still down from a year earlier.

The data gives a more mixed picture of the euro-area economy, which has been held back for months by difficulties in German industry. That weakness has prompted economists to predict the European Central Bank will soon add stimulus to the economy.

What Bloomberg’s Economists Say...

“The strong performance of French industry will help lift the prospects for euro-area industrial production data, due for release on Friday, which points to growth of around 0.7% on the month.”
-- Maeva Cousin. See her FRANCE REACT

France is also benefiting from stronger domestic demand as consumer confidence rebounds from the Yellow Vest protests. The outlook for households could improve further after President Emmanuel Macron responded to the unrest with tax cuts to spur middle-class incomes.

“The tide seems to have turned for France,” said Daniela Ordonez at Oxford Economics. “The government’s swift and massive response has pushed cyclical momentum in a more positive direction.”

Still, there are indications May’s industry surge in France could prove temporary. A report Monday from the Bank of France showed a slump in manufacturing confidence in June to its lowest level in six years.

--With assistance from Joel Rinneby and Harumi Ichikura.

To contact the reporter on this story: William Horobin in Paris at whorobin@bloomberg.net

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

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