Industrial production rebounded surprisingly strongly in July. A 0.8 percent monthly rise easily beat the market consensus and, while not fully reversing June's unrevised 0.9 percent fall, means output has expanded in three of the last four months. Positive base effects helped annual growth to climb from 0.3 percent to 2.7 percent but production was still some 3.9 percent below its pre-pandemic level in February 2020.

Manufacturing posted a marginally smaller 0.7 percent monthly gain, led by the other goods category (1.3 percent). Transport equipment (0.8 percent) also performed well and food and drink (0.3 percent) similarly made ground. However, there were falls in coke and refined petroleum products (3.4 percent) and machinery and equipment (0.6 percent). Elsewhere, mining and quarrying, energy, water supply and waste management rose 1.2 percent and construction 0.6 percent.

July's bounce puts overall industrial production 0.5 percent above its average level in the second quarter when it expanded 0.9 percent versus the previous period. The sector may be struggling but it continues to fare a good deal better than suggested by recent PMI surveys. More generally, today's report puts the French ECDI at 1 and ECDI-P at minus 15. The real economy as a whole is slightly lagging market expectations.

July production is expected to fall 0.3 percent on the month after falling an unexpectedly deep 0.9 percent in a poor June report.

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.