28 July 2004, 12:17  French business morale hits new 3 yr high in July

French business confidence rose in July to its highest level since April 2001, adding to positive news from Germany and Italy to point to a strengthening recovery in the euro zone's three biggest economies. France's national statistics office, INSEE, said on Wednesday its monthly index based on interviews with business leaders rose to 106 from a revised 104 in June, hitting a fresh three-year high compared with its April 2001 level of 107. INSEE had previously reported a reading of 105 for June. "This is confirmation that the rebound of the French economy is consolidating," said Olivia de Kersauzon, economist at CCF. "France is at last benefiting from the international improvement in trade." Economists polled by expected the index to rise to 105.5 in July. On Tuesday the Munich-based Ifo institute and Italy's ISAE think-tank likewise reported rises in German and Italian business confidence in July. "The (French) business leaders' responses highlight an improvement in industrial economic conditions," INSEE said in a statement accompanying the survey, which showed a strong rise in the "general business outlook" component.
The news boosted hopes for a sturdy recovery in France, the euro zone's second biggest economy after Germany, following an INSEE report last week showing French consumer spending posted its biggest monthly rise in eight years in June. Economists were encouraged by a reading showing a rise in orders and demand, with foreign demand rising strongly. But they were cautious about the strength of the recovery in France. "Growth is there, certainly, but strong growth is not," said Marc Touati, chief economist at Natexis Banques Populaires. "The virtuous circle of consumption, investment, jobs is still not present." "We are in danger of having a slowdown in 2005, returning to around 2.0 percent (growth), and that will not allow a real improvement in unemployment," he added, saying a rise in the euro could slow the recovery. Prime Minister Jean-Pierre Raffarin on Tuesday forecast economic growth in France of 2.3 percent this year. Leading French companies are also upbeat. Auto maker Renault raised its 2004 profit target on Wednesday, emboldened by better-than-expected first-half results. Separately, INSEE said French producer prices were unchanged month-on-month in June, rising 2.2 percent year-on-year. Inflationary pressures in the euro zone should recede next year, European Central Bank policymakers said on Tuesday, adding that the central bank is not expecting to raise interest rates in the next few months.///

© 1999-2024 Forex EuroClub
All rights reserved