French Industrial Output Rises; Confidence Increases

By Francois de Beaupuy

Aug. 10 (Bloomberg) -- French industrial production rose more than expected in June and business confidence gained, adding to signs of recovery in the euro region’s second-largest economy.

Output at factories and utilities climbed 0.3 percent from May, when it gained a revised 2.8 percent, Paris-based statistics office Insee said today. Economists had forecast that production would advance 0.2, according to the median estimate of 19 economists polled by Bloomberg News.

“The pickup in industrial production represents a rebound following a period of rapid inventory adjustment,” said Dominique Barbet, an economist at BNP Paribas, in a research note released before the report. “But sustained strong growth will require sustained final demand.”

There have been signs that Europe is starting to pull out of its worst recession since World War II as the global recovery fuels demand for exports. French manufacturing confidence rose in July to the highest level in 11 months, a Bank of France report showed today. Still, the economy will probably stagnate in the third quarter, the Bank of France also said.

In France, factory output is being helped by a reduction in inventories and a government payment of 1,000 euros ($1,400) for buyers who trade in cars that are at least 10 years old.

Activity in the French auto industry advanced 5.3 percent in June from May, Insee said. Production of planes, boats and trains, and output of chemicals, pharmaceutical goods and energy also climbed. Production of electronic goods, paper, wood and metal declined.

Manufacturing production, which excludes energy and food, rose 0.4 percent from a month earlier.

Insee initially reported output in May gained 2.6 percent.

To contact the reporter on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net.