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Economy in Brief

French IP is Jumping but not for Joy
by Robert Brusca September 10, 2008

French IP made a surprise jump of 1.2% in July but only after a larger decline in June and in the wake of a plunge in May and so that the rise has not restored any momentum to the outlook. The sequential growth rates show a steady weakening in output across sectors with the overall output measure decelerating steadily from 12 months to 6 months to 3 months. The sector paths are a little more uneven than that with consumer goods output even showing an increase over three months. That sector also is posting a gain in the quarter-to-date calculations and it’s the only one to do so. That is largely because auto output is up in the quarter and was up very strongly in July (a 5.1% pace!).

On balance French measures of economic activity have held up well until just before mid-year. The EU has today downgraded the growth outlook for most European countries. It projects what are essentially recessions in Germany, Spain and the UK. However, Italy and France have escaped that list. But France is starting to feel the blow of weaker growth later than some of the others so the jury is still out on how weak France will be and how soon the weakness will manifest itself.

French IP Excluding Construction
Saar except m/m Jul-08 Jun-08 May-08 3-mo 6-mo 12-mo Quarter-to-date
IP total 1.2% -0.6% -3.0% -9.5% -3.8% -2.0% -1.5%
Consumer 1.3% 0.6% -1.5% 1.6% -2.1% -2.8% 7.4%
Capital 0.6% -1.6% -1.4% -9.2% 0.5% -0.2% -5.6%
Intermediate 1.1% -0.6% -3.1% -10.5% -6.0% -3.2% -2.7%
Memo
Auto 5.1% -2.8% -8.0% -21.9% -14.7% -3.5% 1.2%
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