France close to recovery as industrial morale rises
French industrial morale rose slightly more than expected in July to its highest in over a year, offering more evidence that a fragile recovery is taking hold in the eurozone's second-biggest economy.
The official INSEE statistics agency said its monthly industry morale indicator improved for the fourth month in a row to reach 95, from 93 in June, beating economists' average expectation for 94.
Though still some distance from a long-term average of 100, the increase brought the indicator to its highest point since May 2012.
An improving economic outlook prompted President Francois Hollande to declare this month that recovery is under way – though unemployment remains at record high levels.
Chiming in yesterday, Finance Minister Pierre Moscovici declared the recession was over, pointing to forecasts from the Bank of France and INSEE for growth of 0.2pc in the second quarter compared to a contraction of 0.2pc in the first.
"Now we need to work to transform this exit from recession into a genuine recovery," he said, citing recent measures aimed at helping to finance companies.
ING economist Julien Manceaux said industrial production likely stabilised in the second quarter and would start to improve in the current quarter.
"Nevertheless, industrial production is currently still 10pc lower than in 2008, meaning that the road to a full recovery is still long," he said.
INSEE's broader indicator of business confidence, including services and sectors such as retail and construction, rose more timidly than industrial morale, edging up to 87 from 86.
Services rose to 86 after stagnating for four months at 84, raising prospects that the biggest business sector in France is beginning to see an improvement. (Reuters)