Industrial production had a poor June. A 0.9 percent monthly fall was almost twice as steep as the market consensus and followed a slightly smaller revised 1.1 percent gain in May. With base effects also negative, the decline reduced annual growth from 2.3 percent to minus 0.3 percent, its first negative reading since January. Production now stands 4.6 percent below its pre-pandemic level in February 2020.

Manufacturing fared no better with output down a monthly 1.0 percent. Machinery and equipment (minus 1.5 percent) did much of the damage but food and drink (minus 0.7 percent), transport equipment (minus 0.9 percent) and other manufacturing (also minus 0.9 percent) similarly posted losses. Elsewhere, construction dropped 2.6 percent and mining and quarrying, energy, water supply and waste management 0.4 percent.

Still, despite June's setback, industrial production last quarter rose 0.9 percent versus the first quarter and so contributed positively to the 0.5 percent increase in GDP. Looking ahead, the manufacturing PMI (45.1) was very weak in July but its recent rack record with the hard data has not been good. In any event, today's report puts the French ECDI at 6 and ECDI-P at 21. In general, economic activity is running somewhat hotter than expected.

July production is expected to fall 0.5 percent on the month after jumping a surprising 1.2 percent in June.

Industrial production measures the physical output of the nation's factories, mines and utilities. Manufacturing is seen as the best guide to underlying developments as some sectors can be very volatile and cause misleadingly large short-term swings in total industrial production.

Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that won't lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios. Like the PPI and the orders data, construction is excluded from the data. This report has a big influence on market behavior. In any given month, one can see whether capital goods or consumer goods are growing more rapidly. Are manufacturers still producing construction supplies and other materials? This detailed report shows which sectors of the economy are growing and which are not.