French factory fall adds to eurozone growth concern

French manufacturing has had its worst quarterly drop since 2012 in the first three months of this year, underscoring a loss of momentum in the eurozone.

The 1.8% slump from the fourth quarter was the first decline in more than a year and a wider measure of industrial production in Europe’s second-biggest economy fell 1.3%. 

That was the largest since the third quarter of 2013.

ECB president Mario Draghi

The figures add to a general picture of weakening in the region that ECB president Mario Draghi described two weeks ago as “moderation” after a period of strong growth.

Expansion in France and the eurozone was the weakest in six quarters at the start of the year.

“The data confirm that the eurozone economy has simply slowed sharply,” said Claus Vistesen, an economist at Pantheon Macroeconomics in the UK.

“Whatever growth we had in 2017 was never going to be sustained,” he said.

Irish Central Bank governor Philip Lane said it was too early to tell whether recent data and survey evidence were showing a slowdown in the eurozone.

“But let’s see. Let’s see where we are. I think it’s too early to tell”, he told reporters. 

France’s GDP weakened to 0.3% in the first quarter due to winter storms that ripped through the country, hitting factory production.

That number may now be 0.1 or 0.2 percentage point lower, Vistesen said. A second reading is set to be published at the end of this month.

Data elsewhere in euro region this week has been mixed. German production showed a 1% increase for March, though factory orders for the same month unexpectedly fell.

Bloomberg. Additional reporting Irish Examiner

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