PARIS Jan 23 Business morale in France's
manufacturing sector dropped unexpectedly in January as
uncertainty over the state of the euro zone and world economy as
well as upcoming elections weighed on sentiment, adding to hints
that France started the year in a recession.
The slump in industrial confidence, now in its seventh
month, adds to the sense of economic gloom in France just three
months before a two-round presidential election in April and
Manufacturing sector morale fell in January to 91 from 94 in
December, well below a long-term average of 100 and hitting the
lowest level since February 2010, according to a monthly survey
from the INSEE national statistics office. For a table of the
data, please click
In a Reuters poll, 21 economist had forecast, on average,
that the indicator would rise to 95, with estimates ranging from
92 to 96.
"The implementation of an austerity plan in January, poor
international climate, and the unclear presidential campaign
with no clear view about the favourite's platforms have not
reassured the French business sector," ING economist Manuel
Maleki said in a research note.
Socialist candidate Francois Hollande, who is favoured to
win the election against incumbent Nicolas Sarkozy, declared war
on the world of finance on Sunday in a speech to supporters
which drew a flurry of attacks from Sarkozy aides.
The latest dip in confidence points to a longer trend of
decline in France's industrial sector, a potent theme in the
upcoming election which has both candidates vying to save French
jobs and stop a glut of industrial shutdowns.
Sarkozy and Hollande have both promised to set up public
investment funds to support struggling mid-sized firms, while
the centre-right incumbent has pledged to limit job losses with
an overhaul of labour rules before the election.
"We entered into recession in recent months and there won't
be a rebound in the beginning of the year," Maleki said.
Overall private-sector business morale eased to 91 points in
January from 92 in December, well below the long term average of
100 and the lowest reading since December 2009, according to
The statistics office forecast last month that France would
suffer a short, shallow recession in the final quarter of 2011
and the first quarter of 2012 which it said would destroy 60,000
jobs in the first half of the year.