Industrial production contracted in August, largely due to a fall in manufacturing, suggesting that the French economy weakened through the third quarter.

Output declined by 0.3 percent, in line with the consensus forecast, following a 0.5 percent gain in July (revised downward from an unexpectedly strong initial estimate of up 0.8 percent).

Manufacturing output contracted by 0.4 percent month-over-month, dampened by a 1.0 percent decline in food and beverages and 1.2 percent slump in"other manufacturing," particularly pharmaceutical products. The picture wasn't entirely gloomy; output of transport equipment increased by 3.5 percent.

Away from manufacturing, construction declined by 1.4 percent month-over-month, while mining and quarrying softened by 1.3 percent.

Over the three months to August, industrial output increased by 0.4 percent, raising the prospect of the sector contributing positively to third quarter economic growth.

Manufacturing appears to be more robust than suggested by PMI surveys, which landed well below the 50.0 breakeven point in both July and August (before weakening even further in September).

The French RPI now stands at minus four and the RPI-P at 10, showing overall economic activity largely performing within market expectations.

August production is expected to fall 0.3 percent on the month after rebounding a surprisingly strong 0.8 percent in July.

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.