French business climate indicator down

PARIS, March 29 (AFP) – An unexpected decline in the French business climate indicator suggested Tuesday that the French economy, recently one of the main engines of eurozone growth, is losing steam, economists said.  

The indicator dropped to 101 in March from 104 in February, the national statistics institute INSEE said, confounding market expectations of an unchanged reading.  

Economists said the decline was the sharpest for two years and took the indicator to its lowest level since December 2003.  

The decline followed similar falls last week in business climate indicators in Germany and Italy.  

Emmanuel Ferry of Exane called the French survey a very bad sign for economic growth prospects.  

“It is compatible with a virtual recession in the manufacturing sector,” he said.  

Ferry forecast French economic growth of 1.7 percent this year, well below the government’s forecast of 2.0-2.5 percent.  

Marc Touati of Natexis Banques Populaires said he was cutting his growth forecast to 1.6 percent from 1.8 percent in the wake of the business climate data.  

“Growth in the first half is now certain to be poor, with an average growth rate of 0.4 percent per quarter,” he said.