UPDATE 1-French central bank forecasts first-quarter growth of just 0.2 pct

Mon Mar 10, 2014 6:24am EDT

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(Updates with detail)

PARIS, March 10 (Reuters) - France's central bank forecast meagre first-quarter economic growth on Monday, while the country's statistics office said industrial output began the year on a weak footing due to a slowdown in energy production.

The Bank of France predicted the euro zone's second-biggest economy would eke out growth of just 0.2 percent in the first three months of the year, reiterating a previous estimate.

That would mark a slight slowdown from the final quarter of last year, when the economy grew 0.3 percent in an uptick that suggested a nascent economic recovery had taken hold.

The government of President Francois Hollande is counting on economic momentum picking up throughout 2014 to help reduce unemployment, and the weakness of the recovery may prove disappointing.

Statistics agency INSEE said on Monday that industrial production fell 0.2 percent in January. That was far short of the consensus forecast for 0.2 percent growth in a Reuters poll of 20 economists.

The biggest drag came from energy production, which fell by 4.4 percent, due to mild temperatures in France in January.

Excluding energy, manufacturing rose 0.7 percent, according to INSEE.

Separately, the Bank of France said in its monthly business sentiment survey that the morale index for the industrial sector edged down to 98 from 99 in January, just shy of its long-time average of 100.

But the central bank cited strengthening nonetheless in many sectors, notably in the chemicals, pharmaceutical and equipment and machinery sectors.

It said industrial activity was expected to rise slightly in March.

Service sector activity also grew, especially in IT services and temporary work, and staffing levels grew slightly, although confidence levels in the sector remained static, the same as January. (Reporting By Alexandria Sage; Editing by Hugh Lawson)

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