PARIS, Feb 4 - Activity in France's dominant services sector rose to a three-year high in January and businesses grew increasingly optimistic about the future, a key survey showed on Wednesday. The /CDAF Business Activity Index, a broad range of overall activity in a sector that accounts for around three quarters of business output in the euro zone's second largest economy, rose to 60.1 in January from 58.2 in December. Any reading above 50 signals growth, while any reading below means contraction. January's reading was the highest since December 2000.
"The consumer in France seems to be in a much more buoyant mood than say in Germany and Italy at the moment," said Chris Williamson, head of economics at NTC Research, which compiles the monthly survey for Reuters. "That is creating a much more even pattern to growth, with business-to-business services and consumer services both reporting strong current growth and increasingly buoyant expectations for the year ahead," he added. The upbeat survey reinforced a picture of strengthening recovery in France. On Monday, a separate /CDAF Purchasing Managers Index (PMI) survey showed manufacturing activity surged in January, and official figures last week showed business morale also rose in January. The services survey showed a specific index measuring business expectations jumped to 78.1 from 68.7 in December, reaching its highest level since May 2000. New business also increased. The employment index rose slightly, up to 51.1 from 50.3 in December. Williamson said France's jobless rate would be key to determining the strength of growth in the year ahead. "We really do need to see employment growth beginning to rise to add an extra impetus to consumer spending," he said. "It's very disappointing to see the January employment index at 51.1, which is not really showing any significant growth."
Firms were reluctant to raise their costs by taking on new workers and were opting to allow backlogs of work to mount in the hope they could clear the work in the months ahead, he said. France's unemployment rate rose to 9.7 percent in December, official figures released on Friday showed. The high jobless rate has held down consumer confidence, which was unchanged in December from November. Finance Minister Francis Mer said in a radio interview broadcast on Saturday that France was on the verge of a jobs recovery.//