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

Workers operate at their post at the French car manufacturer PSA Peugeot Citroen assembly line, in Aulnay-sous-Bois, north of Paris, Monday, Jan. 28, 2013 as some unions decided for a new strike. The Aulnay plant has been at the center of a battle over the future of France's largest automaker. The company announced last year that it planned to cut 8,000 jobs and close Aulnay as it struggles to compete in Europe's stagnant car market. (AP Photo/Christophe Ena
AP Photo/Christophe Ena
France is making stuff again.
By Gwynn Guilford
euPublished Last updated This article is more than 2 years old.

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.

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:

France’s manufacturing output has seen a similar turnaround:

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

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.

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