Industrial production in France plunged 3.7% year-over-year in May, which was much worse than the 1.0% decline expected by economists.
“In one line: Horrible; GDP contraction in the second quarter is now base case,” said Pantheon Macroeconomics’ Ian Shepherdson. “We are running out of downbeat adjectives to describe the data in France, with the headline numbers from the French industrial production report truly appalling.”
“Surveys suggest there is no industrial rebound in sight,” said Bloomberg’s Maxime Sbaihi and Niraj Shah.
This comes as deflation risks rise. Earlier, we learned that the consumer prices increased by 0.5% in June, down from 0.7% in May, and worse than the 0.7% expected by economists.
“The decline in the French inflation rate may increase pressure on the European Central Bank to ease monetary policy of the euro area again in the months ahead,” said Bloomberg’s David Powell.
At its June policy meeting, the ECB pushed rates into negative territory in its efforts to stimulate growth and inflation.