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 EN FRANCAIS

Industrial Output :  2004 to September 2006

Between January 2004 and September 2006, the overall industrial output index (excluding energy and the food and agriculture industry) increased +3.7% despite major output gaps that affected most sectors in Q3/06. However, year on year, the index rose the fastest in 2004 gaining +3.5% due to the auto industry +11.9% output index performance, and consumer goods +1.6% intermediate goods +2% and capital goods +3.2% In 2005 the overall index declined -1.2% impacted by a series of events that resulted in a major industrial slowdown with the exceptionb of the Capital Goods sector mostly due to marge Airbus orders. Nevertheless, soaring oil and gas prices affected consumer confidence on all counts and arched over uncertainties and fear linked to the May European Constitution Referendum outcome; as a direct result, corporations and businesses alike suspended hiring and investments plans, and, the November riots up to December, worsened an already atone labor market while similarly, stagnating salaries impiged on consumer demand as yearly inflation stood at 1.5%  That same year, the automobile industry recorded its first production gap and collapsed -11.8% while consumer goods output gained a modest +0.4% The capital goods sector kept its upward momentum as output grew +4.2% unlike intermediate goods -0.9% output dip.

Year to date, intermediate goods production increased a slight +0.2% but capital goods rose +3.6% The automobile industry production stayed in the red -6.3% but improved compared with the previous year while consumer goods output fell -0.9%

In 2004, the CAPITAL GOODS sector output index rose +3.2% but was nevertheless outperformed by its own record production year in 2005 to +4.2% Year to date output rose +3.6%

The Boats-Trains-Planes-Motorcycles output index jumped +15.2% in 2004 and Mechanical Equipment production rose +3.1% That same year however, the Electric-Electronic Equipment output index fell -2% following a record October month +4.9% 

In 2005, the Boats-Trains-Planes-Motorcycles  production index stayed in the lead and rose +10.1% impacting upward both the Mechanical Equipment output index +4.7% and the Electric-Electronic Equipment index +3%  In 2006 and although production rescinded, gains remained vibrant as the

Between January 2004 and up to September 2006, the Boats-Trains-Planes-Motorcycles output index outperformed all other categories and jumped +30.6% The Mechanical Equipment production index rose an impressive +12% while to a lesser extent the Electric-Electronic Component index rose +3.6% as May and June 06 recorded each exceptional production indices respectively +3.6% and +4.4%

For the Boats-Trains-Planes-Motorcycles category, variances demonstrate that production capacities run to the full throughout as each output gap is systematically preceded and followed by strong rebounds. In July 2004 when output fell -10.4% ,due mostly to the summer vacation, production increased +6.6% the previous month and again rose +9.1% in August. In 2005 as output pauses occurred more often than the previous year due to a general industrial slowdown, production rebounds, noticeable between production gaps, systematically offset any downward output trend. Year to date, with only three production gaps, the same output strategy took place.  

The Mechanical Equipment output index showed to be less pro active due to its heavy dependance on the

Inversely to Capital Goods, INTERMEDIATE GOODS production performance between 2004 and year to date syated modest rising +1.2%  In 2004 production increased +2% but in 2005 and due a major industrial slowdown which included the first automobile industry output gap, production fell -0.9% In 2006 and up to September, output remained quasi stable or +0.2% although May, and August had recorded sustained production activities or +2% each month.

All categories of the Intermediate Goods sector reflect throughout their respective production performances pressures brought about by growing competition, unlike the Capital Goods sector. In 2004 however, Intermediate Goods best output year overall, all categories, with the exception of Textile -4% gap due to massive imports, saw production increase: the Mineral Products production index rose +2.1% Wood-Paper-Cardboard Products +3.7% Chemicals-Plastic-Rubber Products +1.5% Metals-Metallic Products +2% and Electric-Electronic Components +2.7%

In 2005, only two categories saw production rise, Wood-Paper-Cardboard Products +2.7% and Electric-Electronic Components a more modest +0.7% while all other categories recorded strong output dips : the Textile output dived -9.3% Mineral Products fell -0.9% Chemicals-Rubber-Plastic Products declined -1.4% and Metals-Metallic Products -1% 

In 2006 and year to date, only two categories saw production pick up, Mineral Products output rose +1.6% and Metals-Metallic Products +2.2% due to a vibrant construction sector while the Electric-Electronic Components Index fell -0.5% Textile stayed nil and Wood-Paper-Cardboard Products dipped -2.3%  

Between 2004 and year to date only three categories saw output rise: Mineral Products output index increased +3.7% Metals-Metallic Products rose +2.5% Electric-Electronic Components +2.6% and Chemicals-Plastic-Rubber Products a slight +0.8% Inversely, Textile output collapsed -13.8% (but the synthetic fiber component saw output rise from 2005) and Wood-Paper-Cardboard Products production fell -1% 

Whereas Mineral Products recorded two major output gaps in 2005 (-3.6% in February and -1.2% in September) Textile recorded seven production gaps that same year and as early as January. Inversely, Wood-Paper-Cardboard Products output index succeeded in remaining in the black despite negative outputs but in lesser numbers. Chemicals-Plastic -Rubber products output by contrast fell in the red as output seesawed the entire year unlike the Metals-Metallic Products production where output only fell noticeably the first three months of the year. Despite a hectic Capital Goods market, Electric-Electronic Components output stayed extremely tame in 2005 due to several production gaps.

By year end, only two components are likley to record positive output gains, Electric-Electronic Components and Metal-Metallic Products as they very much depend on the Capital Goods sector Boats-Trains-Planes-Motorcycles category, which unlike other groups, has recorded heavy order books. 

The AUTOMOBILE INDUSTRY output index recorded its best production year in 2004 with a record +11.9% gain. Only four output gaps affected that sector (-3.3% in January, -1.7% in April, -7.5% in August due to the summer vacation, and -2.3% in November) As with the Capital Goods sector however, every production dip was preceded and followed by a strong output rebound. By 2005 with fierce competitors entering the French market more aggressively with bio fuel or hybrid cars, lower prices and strong incentives, and, as oil prices shot up to record levels, the Automobile industry dived for the fist time and -11.8% with gaps occurring seven months out of a total 12. 

The CONSUMER GOODS sector performed similarly to all industrial sectors in 2004 as output rose +1.6% recording thus its best production year. The following year however, output increased a modest +0.4% and in 2006 year to date declined -0.9%  Between 2004 and up to September 2006 out of that sector’s categories, Pharmaceuticals-Perfumes-Personal Care Products performed best as output rose +11.6% while all others fell to alarming levels : the Clothing-Leather production index dived -23.2% Printing-Reprints declined -4.2% and to a lesser extent Household Equipment decreased -1.8%

In 2004 and out of the Consumer Goods categories, Household Equipment saw production rise +4.2%, ranking thus first. The Pharmaceuticals-Perfumes-Personal Care Products output index grew +2.6% +5.3% in 2005 and +2% to September 06. Clothing-Leather dipped -5.6% in 2004 and recorded a massive -12% output gap the following year and still stayed in the red in 2006 or -2.7% up to September. Printing-Reprints recorded a modest +0.4% production gain in 2004 and performed nearly as similarly as Clothing-leather with output gaps widening from 2005 to -4% and -4.2% year to date. 

With imported leather shoes originating increasingly from China and Vietnam (see July 06 news) as well as neighboring European countries, leather output along with clothing recorded its worst production year in 2005 recording as many dips as in the previous year but with little rebounds in between. In 2006 and year to date, no improvement is likely to bring back that category in the black as similar output gaps have been developing. The Home Equipment output index decline since 2004 occurred similarly with growing imports (tv sets, dvd’s vcr’s, etc… ) and is likely to deteriotate further as consumers increasingly favor foreign products. Inversely, Pharmaceuticals-Perfumes-Personal Care Products benefit from both local consumers and vibrant exports, but as regards perfumes, the increasing number of counterfeited fragrances sold by street vendors could prove damaging to local production due to a reduced internal consumer demand. As for Publishing-Reprints, output has been declining regularly due to paper-less means of communication such as the Internet in addition to near market saturation whereby readers can no longer follow an overly prolific sector. 

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