After the German production data on Friday, also French industrial production data disappointed yesterday morning. In October, French industrial production dropped for a second straight month, while the consensus was looking for a small pick-up. In France, industrial production dropped by 0.7% M/M after a 2.7% M/M decline in September. Manufacturing production weakened by 0.9% M/M and construction fell by 1.1% M/M, which was partly offset by an 0.2% M/M increase in production of water and utilities. Within the manufacturing sector, weakness was based in the automobile sector. Production of transport material (-2.4% M/M) and the automobile industry (-4.7% M/M) dropped sharply, which was partly offset by a rebound in mining (5.2% M/M), coke and refinery (3.6% M/M) and electricity & gas (1.6% M/M). In Italy too, industrial production continued to suffer in October. Industrial production dropped by 1.1% M/M, the second consecutive monthly decline, while a more limited drop (by 0.3% M/M) was expected. Available details suggest that weakness was broad-based as production of both durable (-3.7% M/M) and non-durable (-1.4% M/M) consumer goods, but also of capital (-1.6% M/M) and intermediate (-1.2% M/M) goods dropped during the month. After a poor end of the third quarter, these data suggest that production weakened further at the start of the final quarter of 2012. The confidence indicators provide some hope that the worst might soon be behind us, and a gradual recovery will start in 2013, but the outlook remains extremely uncertain.