Improved Business Climate Points To French Recovery

A sharp fall in unemployment in June, announced here July 29, and an improvement in business confidence point to a possible pickup in French economic momentum even though prospects are clouded by hesitant consumer sentiment.

Finance Minister Thierry Breton was quick to hail an announcement from the labor ministry that the number of jobless workers fell 1.4% in June to 2,448,900 while the unemployment rate dipped by 0.1 point to 10.1% of the work force.

The current French government, installed in June after voters rejected a draft European Union constitution, has taken aim at France's stubbornly high jobless rate, seen as the source of widespread public dissatisfaction with the leadership of President Jacques Chirac. The administration has introduced measures designed to make it easier -- and less expensive -- to hire workers. The head of the opposition Socialist Party, Francois Hollande, dismissed the labor ministry report as a statistical fluke. Maryse Dumas of the CGT trade union said that while the number of job seekers decreased by 35,200 in June an estimated 39,000 people were removed from the list of those looking for work.

The national statistics institute INSEE reported that the confidence of French families in their economic situation had held steady in July compared with June. The agency earlier this week said confidence among French business leaders continued to recover in July but warned that the overall climate remained "gloomy." But analysts stressed that prospects for the French economy were uncertain in light of the somber mood of French consumers. "Household confidence is stuck at historically low levels," said Emmanuel Ferry of the Exane brokerage, who added that consumers have determined that now is not the time to spend money.

Copyright Agence France-Presse, 2005

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