French Industry Production Plunges Lower to 0.8%, Lowest Since November 2014

French Industry slumps lower in the third quarter as production unexpectedly fell to 0.8%, a number lowest since November 2014.

Economists forecasted a 0.2 increase according to Bloomberg survey, making the 0.8 percent downward curve such a big surprise. The statistics office reported Thursday that French industry output fell by 0.8 percent annually. Meanwhile, manufacturing output also dropped by 1 percent this month.

Barclays economist Francois Cabau said, the drop in French industrial output is "worryingly weak."

"With this further fall in manufacturing output, we remain concerned by the lack of stable footing in the current recovery," said Mr. Cabau. Barclays is among the analysts that projected a 0.1% to 0.2% quarter growth according to their DRP tracking estimate.

"There's no real reason for this sudden change in direction and the summer months are often difficult to read, so we shouldn't make a snap judgment," said Cabau. "Yes, the PMI show deceleration but the Insee and Bank of France indexes are more complete and have consistently been more reliable."

According to City A.M., UniCredit economist Tullia Bucco said the third quarter slump in the French Industrial output is disappointing, especially that the manufacturing surveys were pointing to healthier levels.

Bucco expects French industrial production to pick up in the following months based on confidence surveys due to falling oil prices and weaker euro.  

Markit Economics survey indicated manufacturing dropped for a second consecutive month in August. Meanwhile, France's economy stagnated in the second quarter. This led to a slow 0.4 percent average growth across euro area. 

Meanwhile, Insee's manufacturing confidence measure increased to a four-year high of 103 last month. The Bank of France's index for manufacturing executives remains steady at 98, which indicates a 0.3 percent rise in GDP for the third quarter. 

The latest July data suggest that the nation's recovery is sluggish compared to its neighboring countries. Germany's industrial production gained 0.7 percent, and Spain's industrial production increased by 0.6 percent during the same period.