Refinery strikes accelerated fall in industrial output in October

Posted 2 Dec. 2022 at 9:36Updated 2 Dec. 2022 at 02:34 PM

The industry takes the hit. For the second month in a row, manufacturing production fell in October, down 2%, after having already lost 0.5% in September, according to data published this Friday by INSEE.

In French industry as a whole, the plunge is even stronger, and reached 2.6%, after a decline of 0.9% a month earlier.

Dizzying decline

The bad figures for October certainly bear the scars of the strikes in the refineries which lasted throughout the month. Hit hard, the “coking and refining” branch thus recorded a dizzying drop, exceeding 46% of its production. However, as in September, all sectors of activity are also affected. Thus automobile production continues to decline (-5.8%) still penalized by shortages of chips.

The statistics also highlight significant drops in the branches most exposed to the rise in energy prices, such as chemicals (-4.9%), rubber or wood-paper (-2.2%). , or metallurgy.

In this difficult context, a decline in the activity of manufacturing companies in the fourth quarter seems likely. “The drop in electricity production linked to the difficulties of the nuclear fleet since the first quarter of 2022 weighs on industrial activity in terms of accounts. But at this stage, with regard to industry as a whole, the central scenario is not that of a double-digit drop in production”, tempers Julien Pouget, chief economist of INSEE.

“No double-digit drop”

The industry’s difficulties are confirmed by the monthly S&P Global PMI survey published on Thursday, which indicates the continued contraction of the French manufacturing sector in November. “The industry is suffering from weak demand. In particular, we see the order books abroad deteriorate sharply,” observes Philippe Waecther, director of economic research at Ostrum Asset Management. “This difficult situation is likely to continue in 2023,” warns S&P. Faced with a major energy crisis, the industry is preparing for a tense winter.

Fall in energy production, difficulties in other industries, impact of strikes: all of this will affect growth in the last months of the year. This, at a time when household consumption, the main engine of the French economy, bends, down 5.9% over one year in volume.

In its October forecasts, INSEE anticipated zero growth at the end of the year, after a 0.2% increase in GDP between July and September. “And at this stage, we do not see any element likely to drive growth upwards in the last quarter,” says Julien Pouget. For some economists, it is also from the end of the year that economic activity will contract in France.

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