Paris, Jan. 14 (Bloomberg) -- French industrial production increased the most in more than two years in November and manufacturing in the U.K. unexpectedly rose, a sign Europe's factories are pulling out of a slump. Production in France climbed 1.2 percent from October when it gained a revised 0.1 percent, the government said. U.K. output gained 0.4 percent and a report yesterday showed German companies made 2.5 percent more goods. Manufacturing, about a fifth of the gross domestic product of the dozen nations sharing the euro, is one of the few parts of the region's economy to show strength. That's countering an increase in unemployment and a decline in consumer spending. In Britain, manufacturing is recovering just as retail sales begin to wane. ``Over the next six months we have information that things will be good,'' said Kumar Nayar, finance director of General Cable Industries Ltd., a Berkshire, England-based maker of cables for customers including Tyco International Ltd. and Molex Inc. Western European new car sales surged 11.5 percent in December as consumers took advantage of tax breaks and discounts that expired at the end of the year, according to the European Automobile Manufacturers Association. Ford Motor Co. and Renault SA led the gain. ``These reports suggest the European economy is in a stronger position than we thought,'' Andrea Williams, who manages $2.4 billion at Royal London Asset Management. Stocks gained. The Dow Jones Stoxx 50 Index advanced 0.9 percent to 2519.8 at 11:12 a.m. London time. The index declined 37 percent last year.
`A Bit Better'
Alcatel SA, which is eliminating 10,000 jobs, said fourth- quarter sales rose almost 30 percent. Groupe Seb, the world's largest maker of kitchen appliances, yesterday said the French market ``held up well'' in the fourth quarter. ``The first quarter will be just a bit better,'' for the economy, said Margaret Poigny, an investment strategist at Credit Agricole Asset Management, which oversees more than 160 billion euros ($169 billion). ``An improvement will come in the second half.'' Manufacturers aren't boosting production fast enough to reduce unemployment in France. The number of people looking for work rose to a 27-month high of 2.44 million in November. The jobless rate remained at 9 percent. ``I'm not very optimistic for the coming months in this period of weak economic growth,'' said Regis Platel, an economist at the UIMM employers' federation, a lobby whose members include Renault and Arcelor SA, the world's largest steelmaker. In the three months ended Nov. 30, production increased 0.1 percent from the previous quarter. Airbus SAS said it may not reach its goal of delivering 300 planes this year should the economy slow, leading airlines to cancel more aircraft orders.
U.K. Economy
Britain, which is one of three European Union nations not to exchange its currency for the euro, expanded faster than France and Germany in the third quarter. Gross domestic product grew 0.9 percent in the U.K., compared with 0.3 percent in Germany and 0.2 percent in France. Growth in the U.K. has been led by consumers as factories have struggled to recover from the worst slump in a decade. Shoppers are beginning to balk at some purchases, according to figures released in the past week. Retail sales grew 4.1 percent in December from a year ago, from 4.9 percent in November, the British Retail Consortium and KPMG International said. Dixons Group Plc said 2003 earnings will barely grow.
Mer Sees Recovery
The French economy expanded 1 percent last year, the least since the 1993 recession, Finance Minister Francis Mer said Sunday. Mer was chairman of Arcelor before entering politics last year. The government has predicted economic growth of 2.5 percent this year, a pace the country may reach once a possible conflict with Iraq is resolved, Mer said. ``Once these events are behind us, very quickly the skies will clear again,'' he said. The 12-nation euro economy, second in size only to the U.S., may shrink in the first quarter, the European Union forecast. To revive the region's growth, the European Central Bank last month cut its interest rate to 2.75 percent, the lowest in three years. French production of cars and auto parts increased 2.4 percent in November from the previous month, the government said in today's report. Output of consumer goods such as perfumes gained 2.2 percent, components including computer chips climbed 1 percent and food production advanced 1 percent. //www.quote.bloomberg.com