Jobless rate down, but so is consumer morale

31st May 2006, Comments 0 comments

PARIS, May 31, 2006 (AFP) - The French jobless rate fell to a near 3.5-year low point in April but the dip did little to boost consumer morale which weakened sharply in May as households fretted about high oil prices, official data showed.

PARIS, May 31, 2006 (AFP) - The French jobless rate fell to a near 3.5-year low point in April but the dip did little to boost consumer morale which weakened sharply in May as households fretted about high oil prices, official data showed.

The unemployment rate dropped 0.2 points to 9.3 percent of the workforce in April from March, its best reading since November 2002, the employment ministry said.

At the same time the number of people seeking work last month declined 1.1 percent to 2,262,000, a four-year low.

Employment and Social Cohesion Minister Jean-Louis Borloo, disclosing the results on French television late Tuesday, said the jobless rate could fall below nine percent by the end of the year.

"These figures confirm a lower trend that has been seen since March 2005," Borloo said.

Junior Employment Minister Gérard Larcher attributed the April decline to a number of government and other initiatives, including a program that eases hiring and firing restrictions on companies with a maximum of 20 workers.

He said that overall 50,000 new jobs had been created in the last two quarters.

Larcher added that in the next few months the government's "obsession" would be youth unemployment. Despite a fall in youth joblessness, the unemployment rate for workers under 25 is 22 percent, he said.

Under a program expected to be implemented by the end of June, assistance is to be made available to employers who offer full-time contracts to poorly-trained youths or residents of disadvantaged urban areas.

But analyst Nicolas Bouzou of the financial research group Xerfi argued that making a lasting dent in persistently high French unemployment would require broader structural reform.

"It must be understood that no country has ever resolved its unemployment problems with subsidized contracts," he said.

"Without reforms to the labor market, without definite lay-off procedures, there'll be no return to full employment. That's what the experience of our neighbors teaches us."

At Natexis Banques Populaires economist Alexandre Bourgeois attributed the improved employment picture in April to "a pick-up in the economic situation since the start of the year, which has encouraged enterprises to step up hiring".

He also pointed to a study by the European Commission showing that "the hiring perspectives of French employers are at their highest in four years".

But the good news on the job front failed to inspire French consumers in May, when an indicator measuring their confidence fell three points to minus 30, its lowest reading since December 2005.

The national statistics institute INSEE said index components covering attitudes toward past and future household finances and standards of living, as well as toward purchasing opportunities, all declined in May.

While households did reveal a degree of optimism on job prospects they foresaw "unfavorable" price developments in the near term.

Analyst Mathieu Kaiser at the bank BNP Paribas said the slide "shows the impact the prolonged oil shock is having on household confidence".

"The new dip in household confidence confirms that if spending remains ... the principal driver of French growth, it is a fragile motor.

"As a result, and given the current situation — the high level of the euro, rising oil prices, tighter monetary policies from the European Central Bank — attaining average growth of 2.0 percent this year is at the upper end of our predictions," Kaiser said.

Copyright AFP

Subject: French news

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