July 10, 2012 / 7:36 AM / 7 years ago

French industry slump adds to bleak Q2 outlook

July 10 (Reuters) - France’s industrial output slumped more sharply than expected in May, adding to signs that the euro zone’s second largest economy struggled to gain traction in the second quarter of the year.

National statistics agency INSEE said overall production fell 1.9 percent compared with April, far worse than a Reuters forecast for a drop of 0.9 percent.

The decline was in part due to an 8.7 percent drop in electricity and gas consumption, which partially offset the April’s sharp jump of over 20 percent caused by unseasonably cold weather.

But manufacturing output also slumped, by 1.0 percent, with falls in all segments, from electronics and textiles to transport, underlining just how much demand has weakened as unemployment has risen and business morale dwindled.

The Bank of France said on Monday France’s 2 trillion euro economy probably contracted by 0.1 percent in the second quarter of the year, after flatlining between January and March.

Separately, President Francois Hollande said he expected gross domestic product to have stagnated over the first half, adding that measures were needed to generate growth and bring down jobless numbers, which hit a 13-year high in April.

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