PARIS, Sept 30 - France's jobless rate held steady at 9.6 percent in August, official figures showed on Tuesday, meeting expectations and stemming the negative news from the euro zone's second largest economy as it flirts with recession. The number of people officially registered as unemployed on the basis of International Labour Organisation (ILO) measurements fell 0.5 percent in August to 2,602,000, the Labour Ministry said in a statement. The figure was in line with economists' forecasts and kept the French headline rate well above the euro zone average of 8.9 percent in July. The figures had been scheduled for release at 0645 GMT, but a French radio station and financial newspaper broke the embargo on the data.
The weak readout compounds other recent evidence of lacklustre activity in the economy. Figures earlier this month showed consumer spending suffered its sharpest drop in more than six years in August, and that industrial output fell in July. The French economy shrank in the second quarter and negative growth in the July-September period would put it in a technical recession -- defined as two straight quarters of contraction. Neighbouring Germany and Italy are already in recession. July's unemployment rate of 9.6 percent was already the highest level since May 2000. The Labour Ministry did not immediately release historical data to compare the August figure. The jobless rate has been pushed up by companies shedding labour in an effort to cut costs and repair damaged profit margins. Big firms such as advertising agency Havas and tobacco company Altadis have led the way.
Labour Minister Francois Fillon said earlier this month he did not expect the unemployment rate to fall until the first quarter of next year. With voters ranking unemployment among their main concerns, the government has included a three percent income tax cut in its 2004 budget in an effort to boost growth and create jobs. Higher growth rates would also generate more tax revenue to help the centre-right administration reduce France's public sector deficit, which is in breach of European Union limits.//