French industrial production dropped unexpectedly in July, official figures show. It's the latest evidence that a recovery in the euro zone's second-biggest economy is struggling to take hold. As Amy Pollock reports, it was in sharp contrast to Spain which saw industrial output grow at its fastest rate in 15 years.
It was the best - and worst - of times in factories across the euro zone in July While France's industrial production dropped 0.8 percent, Spain seems to be surging ahead. Its industrial output rose 5.2 percent year-on-year in July. The divergence is sounding warning bells for some. Vicky Pryce is at the Centre for Economics and Business Research. (SOUNDBITE) (English) SENIOR ECONOMIC ADVISOR AT CENTRE FOR ECONOMICS AND BUSINESS RESEARCH, VICKY PRYCE, SAYING: "What we're seeing now is countries slowing down and certainly not growing anything like as fast as its potential, like France which of course also has a serious problem with its deficit, and we're seeing countries like Spain which started from a low base after its own bank rescue operations during the crisis and now benefiting from itself getting its act together." While Germany relies on external demand for its products, countries like France need to look closer to home. (SOUNDBITE) (English) SENIOR ECONOMIC ADVISOR AT CENTRE FOR ECONOMICS AND BUSINESS RESEARCH, VICKY PRYCE, SAYING: "The others really need to do a lot more on the domestic side to get their economies to be performing again. But of course, the international scenario, if it's not working well, it's affecting their exports, so they need to be doing even more on the domestic side." And Spain isn't off the hook yet. While the government forecasts one of the strongest rates of expansion in the euro zone of 3.3 percent this year, the country's still suffering the effects of austerity after the financial crisis. (SOUNDBITE) (English) SENIOR ECONOMIC ADVISOR AT CENTRE FOR ECONOMICS AND BUSINESS RESEARCH, VICKY PRYCE, SAYING: "With 22 percent unemployment it is hardly a sign that austerity works and Spain still has quite a large debt to manage. It has just been considerably lucky in terms of the types of exports it's been able to push into the markets and some of the internal growth that has taken place." As worries over the global economy grow, the euro zone's factories will be feeling the effect. And weaker industrial output could be yet another obstacle in the way of Europe's fragile recovery.