French consumer, business confidence fall in September

23rd September 2011, Comments 0 comments

French consumer and business confidence hit their lowest levels in years official data showed Friday, in a sign that the debt crisis is hitting morale in the eurozone's second biggest economy.

Official statistics agency INSEE said consumer confidence had reached its lowest level in two years in a clear degradation of sentiment since July, the last time data was released.

INSEE said far more respondents than in the last survey believed unemployment would rise and that their financial situation would deteriorate.

Confidence in the manufacturing sector also fell sharply in September with a leading INSEE indicator falling below 100, its longtime average. The business confidence index has been below 100 for most of the financial crisis that began in 2008.

An INSEE business climate index, based on a survey of French business managers, also fell in September with respondents, especially in the industrial sector, forecasting a slowdown in overall activity.

Meanwhile French manufacturing contracted in September according to a leading indicator. The manufacturing purchasing managers' index published by private firm Markit fell to 50.7 from 53.7 in August.

The PMI index is watched as an important leading indicator of performance of the economy.

Marc Touati, economist at Assya Compagnie Financiere called the various results a "catastrophe" and said France was clearly threatened by recession.

On Friday it was revealed in a draft law that the French government had reduced its growth forecast for 2013 to 2.0 percent, lower than the previous 2.5 percent forecast.

Most economists believe the government forecast of 1.25 percent growth in 2012 remains too ambitious.

© 2011 AFP

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