Bank of France Cuts Growth Forecast as Business Confidence Falls

  • Export demand at manufacturers slowed in February: report
  • Service, construction sentiment indexes are unchanged

The Bank of France said growth this quarter will be weaker than previously anticipated and confidence among manufacturers fell the most in three years.

Sentiment among factory executives dropped to 98 in February from 101 in January, its biggest decline since January 2013, according to a monthly survey from the central bank. As a result, the economy will expand 0.3 percent this quarter instead of 0.4 percent, it said on Wednesday.

The drop in confidence is a significant indication that a slowdown in emerging-market economies such as China and Brazil is spilling over into Europe and may threaten France’s first real recovery since President Francois Hollande came to power in May 2012.

“Among manufacturers, production and deliveries showed a pause in February after several months of increases,” the Bank of France said. “Orders are slowing, particularly those from abroad.”

The Bank of France’s indexes of sentiment in both the service and construction sectors were unchanged at 96 last month. Markit Economics said its composite PMI for France dropped to 49.3 in February, below the key 50 level that separates growth from contraction and the lowest in more than a year.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE