French Business Confidence Drops to 14-Month Low Amid Strikesby
Bank of France cuts second-quarter growth forecast to 0.2%
Car, chemicals industries report drop; services also decline
French business confidence fell its lowest level in more than a year in May as strikes hampered refinery output and limited petrochemical supplies.
A gauge of sentiment among manufacturing executives dropped to 97 in May, its lowest since March 2015 and down from 99 in April, the Bank of France said Wednesday. The central bank cut its second-quarter growth forecast to 0.2 percent from 0.3 percent.
Workers at refineries and ports blocked deliveries in late May and truckers halted traffic for a day to protest President Francois Hollande’s plans for a new labor law that would cut overtime pay and give executives more power in wage bargaining. In services, hotels and restaurants reported a decline in demand, bearing out concerns that the protests and the terrorist threat would keep visitors away.
“This provides the first evidence that the strikes have affected the economy, even if the overall impact was limited,” said Maxime Sbaihi, an economist at Bloomberg Intelligence in London. “Construction and services continue to expand, confirming that the recovery continues even if the growth rate is probably slowing from the first quarter.”