French industrial output third quarter rise paves way for positive GDP

PARIS (Reuters) - French industrial production rose by 0.4 percent in the third quarter from the previous quarter, boding well for broader economic output figures due to be published later this week after consumer spending rose over the summer and trade also fared well.

The positive set of data is likely to reassure policy makers about the strength of the French recovery after a shock stagnation in gross domestic production (GDP) figures in the second quarter. This came after a surprisingly strong 0.7 percent rise in the first three months of the year.

On Tuesday, national statistics agency INSEE said industrial production had risen by 0.1 percent in September from August, beating expectations of stagnation, and it also revised higher the output figures for the previous two months, which have been particularly volatile, jumping by 1.7 percent in August after a 1.0 percent fall in July.

In the third quarter, rising output in the transport, water and energy sectors, thanks particularly to the restart of the La Mede refinery after a strike, boosted industrial production by 0.4 percent. Manufacturing output in the July-September period rose by 0.1 percent.

"Today's outcome points to a positive performance of the industrial sector in the summer, confirming that a moderate recovery is unfolding, supported by low oil prices, dynamic domestic demand and past euro depreciation," Unicredit economist Tullia Bucco said.

That came after French consumer spending rose by 0.7 percent in the third quarter and the trade balance contributed 0.1 billion euros over the same period, according to INSEE and customs data.

That leaves inventory changes as the only unknown for preliminary GDP figures to be published on Friday. Inventories knocked a hefty 0.5 percentage points off GDP in the second quarter.

Analysts polled by Reuters expect a 0.3 percent rise in GDP in the third quarter, with the lowest estimate of 37 analysts at 0.1 percent and the highest at 0.4 percent.

Unicredit's Bucco said that after Tuesday's release, her estimate of 0.3 percent GDP appeared tilted to the upside. Societe Generale economist Michel Martinez said there was a possibility that GDP could rise by more than the 0.4 percent he had pencilled in.

The Bank of France estimated this week that economic growth would accelerate to 0.4 percent in the fourth quarter based on its monthly business sentiment survey, which showed better morale in the service and industrial sectors, chiming with PMIs and other surveys.

For full details from INSEE: http://www.insee.fr/en/themes/info-rapide.asp?id=10

For a graphic: http://link.reuters.com/huq57s

(Reporting by Michel Rose; additional reporting by Yann Le Guernigou; Editing by Andrew Callus and Gareth Jones)