PARIS France trimmed its third-quarter growth reading to 0.1 percent from 0.2 percent previously, yet the timid return to positive territory provided some comfort as the country struggles to revive exports and stem job losses.
The INSEE national statistics institute also adjusted its prediction for full-year 2012 gross domestic product growth to 0.1 percent from 0.2 percent previously in its release of final GDP data.
The return to growth in the third quarter, as household consumption bounced back, came after a 0.1 percent dip in second-quarter GDP and calmed initial fears that Europe's No. 2 economy could enter recession by the end of the year.
The increase was driven mainly by a rebound in exports in the quarter and by firmer domestic demand, the final data showed.
The downward revision was mainly due to a downward adjustment in the value of industrial stocks.
On the downside, business investment slid by 0.6 percent after rising 0.5 percent in the second quarter.
Consumer spending, a key motor of the French economy, rose 0.2 percent in November in inflation-adjusted terms, other INSEE data showed, beating expectations for zero growth and bouncing back from a 0.1 percent dip in October. The rise was mainly due to higher spending on household furnishings and energy.
BNP Paribas economist Dominique Barbet said that while the GDP revision was bad news, the retail sales rise was a nice surprise. "Despite the revision, we continue to forecast the full year (GDP) growth at 0.1 percent, although the risk is now greater to get a lower figure than a higher one," he said.
French GDP is being closely watched as Socialist President Francois Hollande is banking on 2013 growth of 0.8 percent - a level most analysts view as over-optimistic - to meet a deficit target that is being seen as a test of his fiscal credibility.
Hollande admitted last week that 2013 would be a "difficult year" with near-zero growth in the first six months and still-rising unemployment, but insisted he could cut the public deficit to below a European Union ceiling of 3 percent of GDP.
INSEE predicted in its quarterly economic outlook last week that the economy would grow just 0.1 percent in the first and second quarters of next year after likely growth of 0.1 percent this year, a level that is below the government's 0.3 percent target and down from 1.7 percent growth in 2011.
It also forecast that although demand would remain weak, a slump in corporate investment should gradually stabilize in mid-2013 as new orders from Germany and trade partners beyond the euro zone spur a pick-up in exports.
With a sickly industrial sector reducing France's share of the European export market and high unemployment weighing on household spending, France's 2 trillion-euro economy had not posted positive growth since the third quarter of 2011.
As surveys show the public is losing patience with economic gloom, Hollande has launched a plan to grant sweeping tax rebates to firms from next year, to reduce labor costs, but critics say the measures do not go far enough.
Fitch ratings agency this month forecast France's 2013 growth at 0.3 percent, well below the 0.8 percent the budget is based on, as it affirmed the country's AAA rating, a badge both Standard & Poor's and Moody's removed from France this year.
The number of people out of work in France rose for the 19th consecutive month in November to reach a nearly 15-year high, labor ministry data showed on Thursday.
"For 2013, the question is whether the recovery seen in most confidence indices ... will help support economic recovery as early as Q1. We doubt so, because of the fiscal tightening in France and the ongoing economic weakness in neighboring countries," Barbet wrote in a research note.
(Reporting by Catherine Bremer; Editing by Helen Massy-Beresford)