Bloomberg: French industry slumped more than expected

French industrial production dropped much further than expected at the start of the year, adding to signs that the euro area’s second largest economy is struggling to regain momentum after the energy crisis, Bloomberg informs.

Output in January fell 1.1% from the previous month, while economists surveyed by Bloomberg had expected only a 0.1% contraction. Statistics agency Insee also revised down December’s figure to a 0.4% expansion from 1.1% previously.

The French economy has slowed to near stagnation in recent months after showing greater resilience than other European countries to the energy crisis and weak global demand in the first part of 2022.

Last month, the government cut its forecast for growth this year to 1% from 1.4%, citing a geopolitical tensions, a slowdown in China and recession in Germany.

French Finance Minister Bruno Le Maire has since called for Europe to address its underlying growth difficulties. He has also put pressure on the European Central Bank to ease its restrictive policy by saying that the fight against inflation has been won.

But most ECB Governing Council members have signaled they want to see more progress on combating inflation before adjusting their stance. Economists don’t expect any change in policy at a meeting this Thursday.

The French data on Tuesday showed manufacturing output was particularly weak at the start of the year with a 1.6% contraction in January — the sharpest month-on-month drop since October 2022. Production of transport materials, including automobiles, dropped 5.3%.

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