French unemployment is set to rise to 9.6 per cent when figures are published on Friday, as growth falters and companies embark on a fresh round of cost cuts, economists said today.
An industry investment survey, also due on Friday, is expected to underscore the weakness in the euro zone's second largest economy as it teeters on the brink of a recession which has already snared neighbouring Germany and Italy.
"It seems that restructuring is gaining momentum rather than easing. The trend is bad," said Deutsche Bank economist Mr David Naude.
"It may very well be the case that France is going to experience a late-cycle recession patch before picking up."
The French economy shrank by 0.3 per cent in the second quarter. Negative growth in the third quarter would put it in recession - defined as two straight quarters of contraction. The injection of a fresh round of school-leavers into the jobs market in July is likely to have increased the supply of labour at a time when demand was weak, economists said.
Companies are seeking to cut costs to repair profit margins, with some of France's top corporate names leading the way.
Engineering giant Alstom plans to chop over 1,000 posts in France, while semiconductor maker STMicroelectronics plans to close its factory in the French city of Rennes later this year, eliminating nearly 500 permanent jobs.
"The unemployment rate will continue to rise in 2004 because growth is insufficient. There needs to be a two per cent (annual) rise in GDP for the unemployment rate to remain stable," said Mr Emmanuel Ferry, economist at brokerage Exane.