Industrial production in France dropped sharply in July and remains 6% below the pre-pandemic level. Construction alone increased production by 0.5% in the month. Over one year, industrial production fell by 1%. This is therefore a difficult third quarter start for the French industrial sector, which is clearly suffering from the disruption of supply chains due to the war in Ukraine, closures in China and rising energy prices as stated by ING.
Looking ahead, the contraction in the order book since February, the high level of inventories of finished products, the high uncertainty, the high prices of energy and raw materials and the potential interruptions in energy supplies do not suggest an improvement in the outlook for the French industrial sector. Indeed, the industry business climate indicator dropped further in August. The industry is therefore likely to make a negative contribution to French economic growth in the third quarter.