QUARTZ CHARTBOOK

In April, euro zone factories were surprisingly busier, thanks to…France

France is making stuff again.
France is making stuff again.
Image: AP Photo/Christophe Ena
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Image for article titled In April, euro zone factories were surprisingly busier, thanks to…France

Euro zone industrial output picked up 0.4% in April, compared with March (pdf). Sure, that seems miniscule. But this is the euro zone we’re talking about, so we count everything. Plus, this upturn surprised even Bloomberg’s stable of economists. Here’s a look at the trend:

Still, measured against April 2012, it fell 0.6%. And production of consumer goods dropped 6.2% compared with April 2012, hinting at the worrisome slump in euro zone consumption. The 1.6% increase in output of capital goods compared with April 2012 buoyed overall industrial production in April. That suggests that businesses are expending. It also means that in the long run, the economy will have the increased production capacity to respond to an upturn in demand. But if demand doesn’t pick up, that will leave factories with excess capacity.

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The upside: the 0.6% year-on-year decline in April comes on the heels of a 1.4% contraction in March, suggesting at least that industrial output might be starting to stabilize.

Even better news comes from France. Industrial production in the euro zone’s second-largest economy—France generates around 20% of GDP—grew 2.3% in April. (Ireland actually outperformed France, with 3.0% growth, but given that it only contributes just shy of 2% of euro zone GDP, it’s less important.) France’s big turnaround in April industrial output was announced on Monday:

Image for article titled In April, euro zone factories were surprisingly busier, thanks to…France

France’s manufacturing output has seen a similar turnaround:

Image for article titled In April, euro zone factories were surprisingly busier, thanks to…France

That adds to nice momentum building in German factories, announced last Friday:

Image for article titled In April, euro zone factories were surprisingly busier, thanks to…France

Steady growth in industrial and manufacturing output again in May will signal two things: that France shedding its scary Greece-ification phase, and that the two big engines of the euro zone’s economy are finally working in tandem again.