The year got off to a bad start in the industry. In January, manufacturing output fell 1.8%, after rising 0.2% the previous month, according to data released by INSEE on Friday. Industry as a whole fell 1.9%, after jumping 1.5% in December.
Production fell in mining (-3%) and in the manufacture of other industrial products (-2%), with the pharmaceuticals sector registering the largest decline. INSEE also points to a sharp decline in “other transport equipment” (-6.7%), “in particular in other equipment (-9.5%) and more moderately in the automobile (-2.6 %)”, notes the Institute of Statistics.
Soaring energy prices
Over one year, production in the manufacturing industry, between November 2022 and January 2023, increased by 2.2%. The automotive industry, in particular, confirmed a recovery in the volumes produced (+13%), being less affected by the difficulties in supplying electronic chips. In 2022, French factories thus assembled only 1.38 million cars, a figure up 3%, far from enough to make up for the delay recorded since the health crisis. Production is also picking up in capital goods.
On the other hand, production as a whole is stagnating, while the extractive, energy and water industries show a sharp drop (-11%), “mainly due to the drop in electricity production”. , explains INSEE. This fell to its lowest level in 2022, according to the annual report published by RTE (Electricity transport network), part of the nuclear fleet having been shut down. The production of energy-intensive industries, the most affected by the soaring prices at the end of the year, also fell significantly: the chemical and wood-paper industries recorded declines of 9% and 5.5%, plastic rubber down 4%.
“Slowdown”
“The slowdown seems more important than what the confidence indicators suggested”, observes the economist of ING, Charlotte de Montpellier. “The bad news is likely to continue to be felt in the coming months, as indicated by the February PMI for the industry, which fell back below 50, falling to 47.4 from 50.5 the month previous”, she considers in a note judging that “manufacturing production could remain very sluggish in the coming months” despite the decline in energy prices on international markets and the improvement in economic prospects.
At this stage, it remains 5% below its level before the health crisis, at the end of 2019, and “has barely returned to the level of 2015”, underlines in a tweet François Geerolf of the OFCE.