Key Takeaways
- French manufacturing production experienced a significant downturn in July 2025, with year-over-year output falling by 1.5% and month-over-month production contracting by 1.7%, worse than estimates.
- France's overall industrial production showed a mixed performance in July, declining 1.1% month-over-month but growing 1.3% year-over-year, exceeding analyst expectations.
- Japan's Liberal Democratic Party (LDP) election panel has decided to hold its leadership vote on October 4, following Prime Minister Shigeru Ishiba's resignation.
- The European Central Bank (ECB) is actively developing a framework to evaluate risk transfer in securitisation deals, signaling ongoing efforts to enhance financial stability and regulatory oversight.
French Industrial Sector Faces Headwinds in July
France's industrial sector presented a mixed picture in July 2025, with a notable contraction in manufacturing activity while overall industrial production managed to post year-over-year growth. Manufacturing production saw a significant decline, falling 1.5% year-over-year, a sharp reversal from the 2.4% (revised to 2.6%) growth recorded previously. On a month-over-month basis, manufacturing output contracted by 1.7%, performing worse than the estimated -1.2% and sharply down from the prior month's 3.5% increase. This indicates a challenging environment for French factories, with the manufacturing PMI also showing a continued contraction, albeit at a slower pace, rising to 48.4 in July.
In contrast, France's broader industrial production showed more resilience. While it decreased by 1.1% month-over-month in July, following a revised 3.7% rise in June, this contraction was less severe than the estimated -1.4%. Year-over-year, industrial production grew by 1.3%, surpassing the estimated 0.7% increase, though it slowed from the previous 2.0% (revised to 2.2%) growth. The previous month saw robust growth, with industrial production surging 3.8% month-over-month in June, marking its strongest pace since July 2020, driven by a rebound in manufacturing output, particularly in transport equipment.
Japan's LDP Leadership Race Set for October 4
In political news, Japan's ruling Liberal Democratic Party (LDP) has confirmed that its leadership vote will take place on October 4. This follows the recent announcement by Prime Minister Shigeru Ishiba of his intention to step down, taking responsibility for the LDP's losses in recent parliamentary elections. The upcoming election will determine the next president of the LDP, who is expected to become Japan's next Prime Minister. Several candidates are rumored to be in the running, including former economic security minister Sanae Takaichi, Agriculture, Forestry and Fisheries Minister Shinjiro Koizumi, Chief Cabinet Secretary Yoshimasa Hayashi, and former LDP Secretary General Toshimitsu Motegi. The market has reacted to the news, with the Japanese yen experiencing a lower opening in trading, while domestic equities saw a relief rally, suggesting optimism about a change in leadership.
ECB Focuses on Securitisation Risk Transfer
The European Central Bank (ECB) is advancing its efforts to bolster financial stability by developing a new framework to evaluate risk transfer in securitisation deals. This initiative, highlighted by ECB's Montagner, aims to streamline the assessment of Significant Risk Transfer (SRT), which is crucial for banks to reduce their capital requirements when offloading credit risk to third parties. The ECB has been working on a "fast-track" process for simpler securitisations to reduce the assessment time, while maintaining detailed scrutiny for complex and innovative transactions. This ongoing development underscores the ECB's commitment to ensuring securitisation markets function effectively and safely within the EU's financial system.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.