In March, both French and Italian industrial production surprised on the downside of expectations. In France, industrial production dropped for the first time in five months, while the consensus was looking for a fifth consecutive increase. On a monthly basis, industrial production dropped by 0.9% M/M, due to weakness in manufacturing (-1.0% M/M) and utilities (-1.0% M/M), while mining production rebounded by 6.8% M/M. Within the manufacturing sector, weakness was led by transport material (-4.2% M/M) and the automobile industry (-4.3% M/M) after subsidies for consumers ended. Overall however, output rose 2.1% Q/Q in the first three months of the year, boding well for the Q1 GDP figures, published on Friday. Also in Italy, industrial production came out somewhat softer than expected, rising only by half the pace expected. In March, Italian industrial production rose by 0.4% M/M as decent production in the manufacturing sector (0.6% M/M) and strength in gas and utilities (3.1% M/M) was tempered by weakness in mining & quarrying (-1.7% M/M). The details of the manufacturing sector show a mixed picture as production of machinery & equipment (2.7% M/M) rose sharply, while production of transport vehicles fell by 2.0% M/M. After a sharp increase in production in February, the slowdown in growth is not really a surprise, but raises expectations that also euro zone industrial production eased in March.