French Confidence Posts First Rise in 13 Months
French manufacturers’ confidence in April rose for the first time in 13 months, suggesting the slump in manufacturing in the euro area’s third-biggest economy may be easing.
An index of sentiment among 4,000 manufacturers rose to 71, from 68 in March, the lowest since the data began in June 1962, Paris-based statistics office Insee said today. That was more than the median forecast of 69 by 21 economists in a Bloomberg News survey.
“There is an improvement, a slight improvement that suggests that the decline in the industrial sector is stabilizing,” Joost Beaumont, an economist at Fortis Bank in Amsterdam, said in a telephone interview yesterday. “The deepest point may have been the fourth quarter and the first quarter.” He added that “forward looking, manufacturers have become less pessimistic.”
Insee estimates the economy shrank 0.6 percent in the final three quarters of the year, less than the 1.5 percent contraction it sees for the first three months of 2009, which would be the biggest since 1975. French Prime Minister Francois Fillon said it’s “likely” the Bank of France’s forecast for a 2.5 percent contraction this year would prove correct.
Unemployment Rising
Demand for manufactured goods is eroding as the economic slump has caused a jump in joblessness. The Organization for Economic Cooperation and Development projects French unemployment this year at almost 10 percent from 8.2 percent now. The International Monetary Fund yesterday estimated joblessness will reach 9.6 percent this year and that the French economy will contract 3 percent online payday loan. charge of the country’s economic stimulus package, said.
“There is a lag between unemployment and the economy,” Patrick Devedjian, the minister in charge of the country’s economic stimulus package, said today in on France 2 television. “In terms of unemployment, things will probably start picking up again after the economy begins its recovery.”
French manufacturers showed a renewed optimism on overall production as the indicator surged to minus 18 from a revised minus 66, on of the biggest rebounds for this reading since 1976, Insee said. They are less pessimistic about their own production outlook and that reading improved to minus 35 from a revised minus 47.
Improvements Expected
The statistics office showed that for all sectors in intermediary goods, from textile, wood, to electronic components, manufacturers said they were expecting an improvement. Order books remained almost unchanged, Insee’s report showed.
President Nicolas Sarkozy in December introduced 26 billion euros ($34 billion) in stimulus measures, most aimed at buoying investment. In February, he pledged an additional 2.6 billion euros in spending and tax cuts for jobseekers.
France has spent 1 billion euros more than planned on a stimulus plan to refund value-added tax to companies. The government has spent 3.5 billion euros to refund companies’ VAT paid on investments.
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