20180618-NATIXIS-France_continues_to_deindustrialise__Why__5页_669kb

Flash Economics Summary

Core Content

This document titled "Flash Economics: France continues to deindustrialise: Why?" discusses the ongoing trend of deindustrialisation in France compared to other major OECD countries, despite overall economic optimism in 2018. It highlights that while manufacturing production capacity has grown in most OECD nations, it has continued to decline in France.

Main Points

1. Trends in Manufacturing Production Capacity (2017-2018)

• General Trend: Manufacturing production capacity has shown recovery or continued growth in all OECD countries except France.
• France's Situation: France is the only country among the analyzed OECD nations where manufacturing production capacity has declined.
• Comparison: Charts 1A and 1B are used to compare the production capacity trends across the United States, the United Kingdom, Germany, France, Spain, Italy, and Japan.

2. Reasons for France's Deindustrialisation

• Profit Margins: Industrial profit margins in France have increased, contrary to expectations that low margins would be a cause for deindustrialisation.
• Labour Costs: Unit labour costs in manufacturing are high in France, which is a key factor in the continued decline. These costs have declined in France, but not enough to offset the broader trend.
• Product Sophistication: French industry has not restored its level of product sophistication, as indicated by low investment in new technologies.
• Capital Modernisation: There is a low level of automation in French manufacturing, which suggests that the capital is not being modernised effectively.

3. Economic Optimism vs. Industrial Decline

• Optimism Factors: The optimism about France's economic performance in 2018 is based on growth in GDP and a decline in unemployment rates (Charts 6A and 6B).
• Caution Needed: Despite these positive indicators, the decline in manufacturing production capacity remains a concern, contributing to the simplification of jobs and worsening foreign trade balance (Chart 7).

Key Information

• Document Purpose: The report is intended for professional and qualified investors, and it is strictly confidential.
• Disclaimer:
  • The document does not constitute a financial analysis and is not subject to legal requirements promoting independent investment research.
  • It is not a personalized investment recommendation and does not take into account specific investment objectives or financial situations.
  • The information is based on public data and is not a complete analysis of all material facts.
  • The views expressed are those of the authors and do not reflect the views of Natixis or any other entity.
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Conclusion

The document concludes that while there is optimism about France's economic performance in 2018, the country continues to deindustrialise due to a lack of product sophistication and insufficient modernisation of its industrial capital. This decline is a cause for concern as it affects the quality of jobs and the country's trade balance.

Notes

• The document includes several charts to support its findings, but they are not described in detail.
• The views and assumptions in the report are subject to change without notice.
• The document is not intended to be used as a complete analysis or as an offer to buy or sell any financial instruments.