In France, manufacturing production experienced a one-year low in August (seasonally adjusted data), about -3% below the peak output observed in May. A contraction of the manufacturing output is now likely in Q319 (it will be avoided only if the output grew by +3.5% in September). This slowing industrial momentum came after months of disappointing confidence surveys, with rising inventories and a decreasing backlog of orders in the whole car supply chain. Carmakers (-2.7% y/y), metals (-2.8%) and plastics/rubber (-2.1%) are among the main contractions in a pattern that is mirroring the Q418 industrial output contraction. A broad negative GDP growth figure is unlikely since the service activity did not exhibit any weakness, but the Q3 GDP growth figure should be quite weak, since the construction output went also on the downside in July-August and with the same magnitude than the industrial output. Moreover, the weakening observed in the industrial landscape is quite broad-based in Europe, showing internationally integrated supply chains are exposed to a lower growth momentum.
