French consumer, business confidence indices diverge

22nd July 2010, Comments 0 comments

French consumers remain gloomy about their prospects while optimism among business leaders has hit a two-year high point, official data released on Thursday showed.

The national statistics institute INSEE said its household confidence indicator suggested that consumers were as pessimistic in July as they had been in June, with the index stuck at minus 39.

The index has fallen nine points since January, with consumers voicing concerns about their personal financial situation and the threat of unemployment.

But in July, according to INSEE, consumers were somewhat more positive about the future of the French economy in general, with an index measuring such sentiment rising two points.

French business leaders meanwhile appear to be in much better spirits. INSEE's business sentiment index rose two points in July to reach 98 points, its best reading since July 2008.

The index had fallen sharply when France was in recession, sliding to an all-time low of 70 in March 2009.

It has since then risen gradually but remains below its long-term average of 100 points.

"Production has clearly picked up, which points to a respectable end to the second quarter," said economist Alexander Law of research group Xerfi.

But he cautioned that even if "this evolution is obviously encouraging, the situation has not returned to normal in French industry."

"The wounds inflicted by the (economic) crisis take time to heal fully."

In a separate report the Markit research group said on Thursday that private sector economic activity in France was well-supported in July.

The group's composite index edged up to 59.9 points. A reading over 50 signals growth, while a score under 50 highlights a contraction in activity.

The gain in July reflected increased momentum in the services sector, which compensated for a slowdown in manufacturing.

© 2010 AFP

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