French Economy Stalls In 1Q As Business Confidence Stands Pat

 @http://www.twitter.rs/JoeO_IBT on April 10 2012 10:50 AM
The re-election big of French President Nicolas Sarkozy will be affected by the nation's economy.
President Nicolas Sarkozy of France Reuters

France's economy stalled in the first quarter, with prospects for a robust recovery remaining slim on weak output and high domestic unemployment in at least the near term, according to indicators released Tuesday by the Bank of France.

Sentiments within the French industrial sector remained unchanged in March at 95, maintaining a three-month low reached the previous month, according to the central bank's survey on industry and services. The dour mood was bolstered by French national statistics agency Insee, which showed manufacturing fell 1.2 percent in February in a separate survey released Tuesday.

Industrial-capacity utilization remained unchanged in the first quarter, while order books were on par with expectations and inventory data were slightly better than expected, the bank said.

Sentiment in industry and services was unchanged despite increased activity in the key components of transportation and engineering.

Overall, the Bank of France survey predicted stability, not growth, for the coming months.

The dual reports showcase the overall role the sovereign debt crisis plays in the euro zone's second-biggest economy, Societe Generale economist Michel Martinez told Bloomberg Businessweek.

The general message is this: The French economy is practically stalled, she said. France doesn't have the problems of its southern neighbors, but its industry remains in recession and we remain very far from a classic recovery scenario.

The Insee survey showed overall output increased a scant 0.3 percent in February, largely driven up by increased energy consumption as France endured a tough winter. Manufacturing output for the three-month period fell 1.1 percent.

Industrial production has been on a downward slope since mid-2011, wrote Fabrice Montagne, an economist at Barclays Capital. We will need to see stronger signs in terms of business sentiment, demand and competitiveness before we can expect a clear upswing in the French industrial sector.

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