French Business Confidence Climbs From Low

French business confidence climbed from a two-year low last month and industrial output increased in November, indicating the euro-region’s second-biggest economy may avoid a recession.

The Bank of France’s Business Sentiment Indicator (FRBSI) for manufacturers advanced to 96 from 95 in November, the lowest since September 2009. The reading suggests gross domestic product was unchanged in the fourth quarter, the central bank said today in a statement from Paris.

The euro region’s sovereign-debt crisis and slowing global growth are curbing investment and demand for French goods. Companies such as PSA Peugeot Citroen SA (UG) and Societe Generale SA are cutting jobs to cope with lower demand and the debt crisis.

Europe is still in dangerous territory as the sovereign- debt crisis has turned into a crisis of confidence,” Elga Bartsch, chief European economist at Morgan Stanley in London, said in a note to clients. “A mild recession over the winter could turn into a deep one if a full-blown, area-wide credit crunch materializes.”

French factory output is also improving. Industrial production climbed 1.1 percent in November, lifted by electronics and refinery output, national statistics office Insee said today. Manufacturing production climbed 1.3 percent following a revised 0.2 percent increase in October.

Orders, Inventories

Even so, industrial production fell 1 percent over the past three months, according to Insee. Order books are less full now than they were a month ago and inventories are at their target level, the Bank of France survey of manufacturers showed.

A decline in December industrial production “after this strong November reading is likely,” said Gizem Kara, an economist at BNP Paribas in London. “Surveys and anecdotal evidence suggest manufacturers have accumulated excess inventory, which will weigh on future output.”

The European Central Bank’s governing council meets later this week, followed by a press conference by President Mario Draghi on Jan. 12. The Frankfurt-based central bank will leave its key refinancing rate at 1 percent, according to the median of 51 forecasts in a Bloomberg News survey.

To contact the reporter on this story: Mark Deen in Paris at

To contact the editor responsible for this story: Craig Stirling at

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