PARIS (MNI) – French economic activity is likely to remain subdued
in the near term, with industry stagnant and the services losing steam,
the Bank of France said Monday, citing the results of its monthly
business survey.

The central bank projected GDP growth in 3Q at 0.2% — no stronger
than what it and the national statistics Institute Insee expect for 2Q.
Most analysts have forecast +0.3% or more for 2Q GDP. Preliminary
estimates will be released Friday.

Factory-gate prices are rising only slightly and service charges
are tending to stabilize, the Bank of France noted.

Its survey indicates that industry output expanded slightly in
July, “mainly underpinned by the transport equipment sector.” Capacity
utilization eased another 0.6 point to 79.5% — more than two points
below the long-term average — after full-point downturn in June.

The bank’s sector climate indictor, based on the latest three
months’ results, slipped another point to 98 after an 11-point slide
since May. Most analysts had hoped it would stabilize.

The decline in industry order books seen in June continued in July,
while finished goods stocks were assessed at normal levels.

Firms’ outlook for overall production in August fell back four
points after an 17-point rebound in July to land at +1, which the
central bank interpreted as a sign of “stabilization”. The expected
slowdown appears limited mainly to autos, metals and other intermediate
goods branches, whereas prospects recovered elsewhere.

The results are only slightly less dismal than France’s factory
PMI, showed output stagnant in July and new orders declining slightly.

France’s services sector, which far outweighs industry as a share
of activity, appears to be holding up somewhat better. The BoF’s survey
suggested that after the slowdown in recent months, activity could
regain some momentum in the near term: the outlook index regained six
points after an 11-point tumble since May. Near-term prospects recovered
in most branches, especially information and communication, advertising
and management.

Still, the services climate indicator also shed one point to 98,
returning to the level last seen in November after reaching a high of
103 in May.

The services PMI was more promising, signaling moderate growth in
activity (54.2) and new business (54.8).

–Paris newsroom +331 4271 5540; e-mail: stephen@marketnews.com

[TOPICS: M$F$$$,M$X$$$,M$$EC$,MT$$$$,MGX$$$]