French Consumer Sentiment Gains as Rise in Joblessness EndsMark Deen
French consumer confidence climbed and jobless claims dropped for the first time in more than two years, the latest signs that Europe’s second-largest economy is recovering after exiting a recession in the second quarter.
Consumer confidence improved for a third month, rising to 85 from 84 in August, national statistics office Insee said today. The number of people actively looking for work in France fell by 50,000, or 1.5 percent, to 3.24 million in August, the Labor Ministry said late yesterday.
The decline in jobless claims snaps an uninterrupted 27-month rise, providing a boost to President Francois Hollande, who has repeatedly pledged to halt the rise in unemployment. While ebbing job concerns helped boost consumer confidence, both economists and government ministers caution that the figures don’t yet show a sustained economic turnaround.
“Whats interesting is that the job situation improved hugely, while consumer confidence did only barely,” said Jean-Christophe Caffet, an economist at Natixis bank in Paris. “That makes me skeptical of the August jobs report. For the recovery the clouds may be clearing, but the economy is far from being repaired.”
The French economy expanded 0.5 percent in the second quarter, ending more than two years in which gross domestic product stagnated. The advance was led by exports and consumer spending, while investment extended its decline.
Jobless claims remain close to the record 3.29 million set in July and are up 7.3 percent from a year earlier. The unemployment rate remains at a 14-year high of 10.9 percent.
“Hiring has picked up and there is job creation,” Labor Minister Michel Sapin said today on France Inter radio. “This is not yet the sustained reversal in the unemployment curve that we’re looking for.”
Hollande’s government is also seeking to foster growth by slowing the pace of deficit reduction. Finance Minister Pierre Moscovici said yesterday that the budget deficit will narrow to 4.1 percent of GDP this year from 4.8 percent in 2012.
The European Commission predicts a 3.9 percent deficit for 2013. Moscovici presented the government’s economic strategy today to Olli Rehn, the EU’s commissioner for economic and monetary affairs.