French economic growth stalls


France's economy posted no growth in the first quarter and there is no sign of a brisk recovery, according to a Bank of France survey today.

In its monthly report, the Bank of France indicated that the euro zone's second largest economy had avoided a recession and that activity was likely to remain stable in the coming months, a picture confirmed by soft manufacturing data today from the INSEE national statistics office.

INSEE had also forecast last month that France's €2 trillion economy would post no growth in the first quarter.

The Bank of France said that its business sentiment indicator for industry was unchanged in March at 95, a 3-month low it reached in February.

It noted that industrial activity improved, with rises in pharmaceuticals and chemicals, transport equipment and hi-tech goods.

"Forecasts suggest that activity will remain stable in the short term," the bank said in its report.

Industrial capacity utilisation was unchanged in March and remained below its long-term average. Order books were close to normal levels while inventories were slightly above target.

For the services sector, meanwhile, the business sentiment level was also unchanged at 93, while the Bank of France said activity here had grown at a faster pace on the back of transport and engineering.

In a separate survey, INSEE said that manufacturing output fell by 1.2 per cent in February, after slipping by a revised 0.1 per cent in January.

For industry as a whole, output increased by 0.3 pe rcent, in line with economists' forecasts, helped by a rise in gas and electricity consumption amid a cold snap.

Industrial output rose a revised 0.2 per cent in month-on-month in January, in line with the euro zone average.

Economists said that the data confirmed the picture of an economy in the doldrums.

"Today's industrial production data support our forecast for flattish GDP in Q1," wrote Tullia Bucco, an economist at Unicredit in Milan.

For the last three months as a whole, manufacturing output fell by 1.1 per cent. It stood 1.6 per cent below its level of a year earlier.

Hit by the closure of the Petit-Couronne plant, owned by insolvent oil refiner Petroplus, refining activity plunged by 13 per cent in February.