French Factory Confidence Climbs on Outlook for Global Recovery

French industrial confidence climbed in February as executives looked to improving global demand to lift orders in the months ahead.

Sentiment among factory executives rose to 90 from 87 in January, national statistics office Insee said today in a statement from Paris. Economists had expected a reading of 87, the median of 19 forecasts in a Bloomberg News survey showed.

The increase suggests conditions may be improving for businesses after the French economy dipped into recession last year and shrank more in the fourth quarter than in any other since 2009. Even so, the industrial confidence index remains below the average reading of 96 set over the past six years as President Francois Hollande struggles to cut the budget deficit and revive growth in the wake of Europe’s financial crisis.

“We expect France to continue to stagnate in 2013,” said Pierre-Olivier Beffy, chief economist at Exane BNP Paribas in London. “The euro zone should improve gradually from the second quarter” though “domestic demand will be hampered by fiscal austerity, which will remove 0.8 percent of household purchasing power for the whole year.”

Hollande told journalists yesterday in Athens that France will set new 2013 growth and deficit forecasts next month after the European Commission publishes its own estimates on Feb. 22. Finance Minister Pierre Moscovici said the government is looking for extra spending cuts to help trim the deficit to close to 3 percent of gross domestic product from 4.5 percent in 2012.

The lackluster outlook contrasts with neighboring Germany, whose export-oriented economy is reaping the full benefits of an upsurge in demand from the U.S. and Asia. German investor confidence jumped more than economists forecast in February to the highest in almost three years, the ZEW Center for European Economic Research in Mannheim said yesterday.

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