Faint rise in business confidence in France

28th July 2004, Comments 0 comments

PARIS, July 28 (AFP) - The French business climate showed signs of life in July, figures released Wednesday revealed, but analysts were quick to warn that the more positive mood in business circles remained fragile.

PARIS, July 28 (AFP) - The French business climate showed signs of life in July, figures released Wednesday revealed, but analysts were quick to warn that the more positive mood in business circles remained fragile.

The national statistics institute INSEE reported that its business climate index for July rose to 106 from 104 in June.

"After having levelled off from March to June, the ... indicator is rising again," INSEE found.

The report came a day after the German economic forecasting institute Ifo said its measure of business confidence in Germany, the largest economy in the euro zone, showed a rise in July after two months of declines.

The Ifo business climate index went up by one point from June to 95.6, eclipsing a gain of 0.4 points foreseen by analysts.

But while analysts in France hailed the July confidence measure, they warned against exaggerating its significance.

"The French economy is undeniably on the right track," said Marc Touati of Natexis Banques Populaires.

"Households are spending massively and the mood among businesses is upbeat," making it tempting to conclude that a return to strong growth was imminent.

"Despite its increase, the business climate index is far from pointing to vigorous growth -- not only because it is only six points above its long-term average but also because it remains well below its dynamic levels of 1998-2000 (115-123)," Touati maintained.

At the bank CCF analyst Olivia de Kersauson noted that business leaders had indicated that their "personal production prospects," which dipped two points in July as measured by INSEE, "show that businesses remain cautious and that the recovery will be moderate."

Citing a recent projection by INSEE, French Prime Minister Jean-Pierre Raffarin said Tuesday his government was "today (relying) on a forecast of growth of 2.3 percent" this year.

INSEE late last month said French growth should reach 2.3 percent in 2004, surpassing the anticipated average growth rate in the 12-nation euro zone this year.

In another report, the Organization for Economic Cooperation and Development predicted Tuesday that the euro zone economy was likely to grow by just 1.5 percent this year and by 2.5 percent in 2005.

© AFP

Subject: French news

0 Comments To This Article