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PARIS (Reuters) - French industrial output dropped unexpectedly in February while the trade deficit was close to a record, data showed on Friday, tempering France's economic outlook at the start of the year after surprisingly strong business confidence surveys.
With growth and jobs ranking as a top concern among voters in the imminent presidential election, the data are a fresh reminder of the challenges the next president will have reviving the economy.
In a stark contrast to a surge in Germany, French industrial output fell in February far more than any of the 21 economists Reuters surveyed had expected as the warmest February in a decade muted demand for energy production for heating.
The INSEE national statistics agency said output fell 1.6 percent from January, against expectations on average for an increase of 0.5 percent. Though energy was the main culprit for the drop, almost all the main sectors saw a decline in production apart from the food industry.
"Industrial production will at best make a nil contribution to GDP in the first quarter," Unicredit economist Tullia Bucco said in a research note.
However, with strong services activity and a recovering construction sector, she saw risks to her forecast for 0.4 economic growth in the first quarter to be balanced.
Meanwhile, a recovery in Airbus deliveries helped reduce the trade deficit to 6.6 billion euros ($7.02 billion) in February, but that remained not far from a record 8.1 billion euros registered the previous month due in large part to a dearth of Airbus shipments. reut.rs/2nKc3RU
Elected five years ago on promises to turn the economy around, President Francois Hollande has made little progress reducing the trade deficit despite a 40 billion euro payroll tax credit scheme designed to make French firms more competitive.
The data painted a stark contrast with figures on Friday from Germany where industrial output jumped 2.2 percent in what the Economy Ministry called an "extraordinarily" robust start to the year while the trade balance showed a surplus of 21 billion euros.
Combined with weaker than expected consumer spending figures for February last week, the French figures also clash with an improving picture of the economy emerging from closely watched purchasing manager index surveys.
The latest PMIs have shown executives' confidence running at near six year highs, driven in large part by higher demand at home and abroad, spurring increased hiring.
The surge in confidence has suggested that business leaders are unfazed by the political uncertainty as France prepares for the presidential election in which far right leader Marine Le Pen is polling strong though no surveys see her winning.
Additional reporting by Michel Rose; Editing by Richard Balmforth