French Business Failures Drop to Eight-Year Low in Recovery SignBy
Jobs threatened by insolvencies declined by 15% last year
Drop in bankruptcies led by healthier construction industry
Fewer French businesses failed last year than at any time since the 2008 financial crisis, the latest sign that the euro area’s second-largest economy is strengthening, a report published Tuesday showed.
A total of 57,844 French companies filed for protection for creditors, entered receivership or went bankrupt in 2016, according to Altares, which analysis corporate data. That’s down 8.3 percent from 2015. The number of jobs threatened by insolvencies fell 15 percent to 200,000.
With interest rates at record lows and a drop in energy costs increasing disposable incomes, construction and real estate services are recovering from a slump and consumer spending is improving. While terrorist attacks hurt tourism and a poor grain harvest hurt farm output, full-year growth probably exceeded 1 percent for the second straight year. National statistics office Insee publishes 2016 GDP at 7:30 a.m. Tuesday.
“The 2016 growth, while weak, has helped to put 2017 on the right track,” Thierry Millon, director of studies at Altares, said in an e-mailed statement. “The order books have been replenished, confidence is returning.”
The pace of business failures should decline again this year, falling to around 54,000, Millon added.
In the construction industry, failures fell 13 percent. For trading companies, a 9.5 percent drop was led by a recovery for vendors of machinery, construction equipment and home-improvement goods. In manufacturing and processing, insolvencies declined 8.3 percent, with a better performance for suppliers of wood and construction materials, metallurgy and mechanical materials, and textile, clothes and leather.
Not all areas of the economy did better, with insolvencies for people-transport companies jumping 31 percent, mainly in the taxi business, according to Altares. In agriculture, the number of insolvent livestock farmers increased 7.8 percent.