Monthly industrial output declined by 0.6 percent across the industry, marking a downward trend from December 2024. Most industries experienced a drop in production, with significant declines in machinery and equipment (minus 1.9 percent), coke and refined petroleum products (minus 1.7 percent), and food products and beverages (minus 0.2 percent). However, transport equipment saw a modest recovery (0.8 percent%), driven by a 6.4 percent rebound in motor vehicles.

On an annual scale, manufacturing output shrank by 2.1 percent, with transport equipment suffering the most (minus 7.4 percent), including a severe minus 12.6 percent decline in motor vehicles. Energy-intensive industries remained under strain due to persistent high energy costs, with substantial decreases in iron and steel (minus 21.7 percent), glass (minus 19.0 percent), and basic chemicals (minus 15.7 percent) compared to 2021 levels.

The December 2024 manufacturing index was revised downward (minus 1.0 percent instead of minus 0.7 percent), reflecting a deeper-than-expected contraction. Overall, the sector grapples with weak demand, rising costs, and sectoral imbalances, highlighting the need for strategic interventions to stimulate recovery. This latest update leaves the RPI at minus 14 and the RPI-P at minus 10, meaning that economic activities are slightly behind market expectations of the French economy.

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.