Financial thoughts

Industrial production in France unexpectedly climbed for a third month in February on higher consumer spending and record exports.

Production at factories and utilities, which accounts for 15 percent of the economy, rose 0.3 percent from January, when it gained a revised 0.6 percent, the national statistics bureau, Insee, said today in Paris. Economists expected no change, the median of 25 forecasts in a Bloomberg News survey showed.

Economic growth in France has weathered a U.S. slowdown, record oil costs and euro appreciation, sustained by 9 billion euros ($14.2 billion) in tax cuts introduced by President Nicolas Sarkozy and declining unemployment. Joblessness in France fell to a 24-year low in the fourth quarter.

“It's obvious that the U.S. economy has an impact on the European economy, but you have to put it into context,'' said Emeric Challier, chief executive officer and head of fixed income at Oaks Field Partners, in a Bloomberg Television interview before the report. “We've had figures coming out of Europe that are pretty good.''

The impact of credit-market turmoil may begin to show up in March economic data, according to Mathieu Kaiser, an economist at BNP Paribas SA in Paris. The International Monetary Fund and French government have cut their 2008 growth forecast in the past two weeks, with the IMF seeing a slowdown to 1.4 percent and French officials forecasting as low as 1.7 percent.

Italian Output

Separately, Italy's national statistics office today said industrial output there declined in February as the worsening economic outlook choked demand for manufactured products.

At the same time, inflation in the euro region will accelerate to 2.8 percent this year before slowing to 1.9 percent next year, just below the European Central Bank's 2 percent target, the Washington-based institution also said.

That's preventing the ECB from cutting borrowing costs to cushion against the slowdown, Guillaume Menuet, a senior European economist at Merrill Lynch & Co. in London, said in a Bloomberg Television interview today.

“It will be difficult for the ECB to implement a more accommodative policy through 2009,'' said Menuet. “The manufacturing sector is doing extremely well in the euro zone.''

Beneteau SA, the world's largest maker of sailboats, which is based in Saint-Gilles-Croix de Vie, on the west coast of France, said on April 2 that sales in the sixth months ended Feb. 29 rose 19 percent.

French manufacturing, which excludes energy and food output, rose 0.3 percent on the month, led by a 1.3 percent gain in equipment manufacturing, Insee said. From a year earlier, industrial output rose 2 percent and manufacturing increased 1.9 percent.

January's industrial production was initially reported to have risen 0.5 percent.

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