News ID: 235379
Published: 0930 GMT December 07, 2018

France offers euro economy small hope amid mixed German picture

France offers euro economy small hope amid mixed German picture
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The euro area’s top two economies painted a mixed picture for the start to the final quarter of 2018, leaving the jury out on whether the region is in for a prolonged economic slowdown or a rebound in momentum.

French industrial output rose sharply in October, halting a recent disappointing trend as equipment manufacturing picked up. In Germany, production dropped, but there were signs of upward pressure in pay growth, wrote.

The numbers come less than a week ahead of the European Central Bank’s next policy meeting, in which officials will at least have the improving wage figures to point to when deciding to cap their asset-purchase program.

Economists have been predicting a bounce-back in euro-area economic indicators for months but numbers have continuously disappointed since September. As a result, expectations for a rebound have dimmed somewhat and economists see slower policy tightening by the ECB.

Data on industrial performance can be volatile from month to month and annual changes often tell a different tale. Still, the French figures are reassuring as violent protests around the country could threaten consumer spending in the fourth quarter.

Consumer and energy goods were a drag in Germany, which is also recovering from a summer blip in car production after new emissions-testing standards were introduced.

Despite weaker output, German labor costs went up the most in almost two years in the third quarter, a separate release on Friday showed. Such wage pressures have given ECB officials confidence that inflation remains on track toward the institution’s goal.

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