Sun shines on economy, ten days before vote

26th April 2007, Comments 0 comments

PARIS, April 26, 2007 (AFP) - French industrial data and expected unemployment figures brought sunshine to the economy on Thursday 10 days before the final presidential vote, giving ammunition to rightwing candidate Nicolas Sarkozy.

PARIS, April 26, 2007 (AFP) - French industrial data and expected unemployment figures brought sunshine to the economy on Thursday 10 days before the final presidential vote, giving ammunition to rightwing candidate Nicolas Sarkozy.

Sarkozy, who faces Socialist candidate Segolene Royal, was until recently a leading member of the government.

Asteres economist Nicolas Bouzou described the overall picture painted by the industrial survey as "almost idyllic."

But about 40 academics and economists have urged the government not to publish March unemployment data later in the day, alleging that the figures would be "artificially low" and would amount to "manipulation of public opinion" before the vote a week on Sunday.

The statistics institute INSEE said on Thursday that the confidence of French industrialists had risen in April, mainly on production prospects.

And Prime Minister Dominique de Villepin said he expected the unemployment data to show a further fall in unemployment, a central election issue.

Stressing that the data were compiled independently, he said he "imagined that the figures will go in the right direction."

In February the number of registered unemployed fell by 1.0 percent to 2.066 million and the rate by 0.1 percentage points to 8.4 percent

But analysts warned that the improving industrial climate is being driven by growth in the eurozone and notably Germany, and could quickly cool.

And they said that the latest data was strong despite the strength of the euro which, paradoxically, is criticised by both final candidates for weighing on French exporters and the economy in general.

The strength of the euro, and many aspects of France's commitment to the European Union, were virulently attacked by several minor candidates eliminated in the first round of the election last Sunday.

A common objection is that France has lost control of its currency and that the strength of the euro is a factor penalising French companies and encouraging them to move production abroad, known here as "delocalisation."

The industrial data on Thursday put confidence at 111 points on an index from 109 in March and 108 in February.

At ACDE research group, economist Marc Touati said that industry was showing some signs of dynamism following exceptionally strong consumption and wondered if France were at last heading for sustainable growth of more than 2.0 percent.

French industrial confidence lagged far behind the figure in Germany but French industralists had upgarded their outlook for production by 11 points in April alone, apparently shrugging off the strength of the euro and uncertainty about the election.

But he warned that confidence was still far below previous high points and that if the euro continued to rise, and if business leaders did not like the outcome of the election, fear and weak growth would soon take over.

At the Xerfi insitute, Alexander Law said industrial activity was slowly recovering without any "panic" in response to "alarmist" comments about the euro.

And at BNP Paribas, Mathieu Kaiser said that the outlook remained strong in line with "the dynamics of the whole of the eurozone, driven by orders placed with German companies."

The rise of the euro "has had little effect on the way French companies judge the international environment" and did not weigh on trade within the eurozone.

The strength of the euro, he said "is in fact a signal of the dynamism of the European economy."


Copyright AFP

Subject: French news

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