Data shows French economy stumbling into 2013
The French economy limped into 2013, a widely-tracked economic indicator showed on Thursday in contrast to signals for the overall eurozone, and separate data showed that housing loans and construction activity fell and that industrialists were gloomy.
Consumer borrowing posted the biggest drop last year since 2009 despite ultra-low interest rates as French Finance Minister Pierre Moscovici called for 2013 to mark "a new start for the French economy."
A preliminary, or "flash" purchasing manager's index (PMI), a leading indicator of activity, compiled by London-based research firm Markit for France dropped to an indexed 42.7 points in January from 44.6 points in December, to reach its lowest level in 46 months.
A value of less than 50 indicates a contraction in business activity, and there had been some hope as the indicator suggested late last year that the decline was slowing.
For the entire 17-nation eurozone, the composite PMI, which covers the manufacturing and services sectors, pushed up to 48.2 points from 47.2 points.
"Todays improvement at the eurozone level comes despite a surprisingly big deterioration in French PMIs," UniCredit chief eurozone economist Marco Valli noted.
Other releases showed that the amount of French housing loans plummeted by 26.4 percent last year from the level in 2011, when it had already fallen by 4.2 percent, even as interest rates fell to an all-time low.
The average rate for home loans fell in December to 3.22 percent, a study by the CSA Housing Credit Observatory found, and was expected to decline further this month.
The total amount of approved loans nonetheless fell to between 117.5 and 120.5 billion euros ($156-160 billion), according to Michel Mouillart, an economic professor who was lead author for the study.
The final figure will be released once it was determined if any of the loans were in fact finalised this year.
Activity among craftspeople in the construction industry declined by 1.0 percent in 2012, according to the sector federation Capeb, with a bigger drop of 2.5 percent in the fourth quarter from the same period a year earlier.
The sub-sector counts 380,000 companies that employ 992,000 workers.
Consumer credit declined by 5.1 percent last year to 35.7 billion euros meanwhile, according to data provided by the French Financial Services Association, the biggest drop since one of 13.3 percent in 2009, when France was in recession.
A survey of French industrialists by the Roland Berger group found that just four percent expected their business to do better this year, even though 75 percent said they were able to compete effectively in their respective sectors.
The industrialists pointed to rising raw material costs as a key factor for their pessimism.
The French government has forecast economic growth of 0.8 percent this year, but that figure might be revised lower, while a new International Monetary Fund estimate put French growth at 0.3 percent.
© 2013 AFP