PARIS (MNI) – French economic activity is likely to stagnate in
both industry and the services in the near term, the Bank of France said
Thursday, citing the results of its monthly business survey.

The central bank confirmed its projection for no GDP growth at all
in 4Q, suggesting a further loss of what little momentum remains. The
national statistics Institute Insee has also forecast stagnation in 4Q.

The Bank of France’s survey indicated that industry output expanded
“slightly” in November, but capacity utilization retreated marginally
from 79.3% to 79.2% — more than two points below the long-term average.

Much as expected, the central bank’s sector climate indictor, based
on the latest three months’ results, slipped another point to a two-year
low of 95, down 15 points from the recent high in March.

Order books were still deemed slightly fuller than normal and
finished goods stocks were assessed close to targeted levels.

Firms’ outlook for overall production in December fell two points
to +1, which the central bank interpreted as a sign of stability in the
short term.

The results are less dismal than France’s factory PMI, which showed
output contracting at an ever faster pace in November and new orders
falling at the quickest clip since April 2009. The headline PMI index
dropped to 29-month low of 47.3.

France’s services sector, which far outweighs industry as a share
of activity, is also losing steam. The BoF’s survey flagged a modest
expansion in November, “despite the contraction in the temporary work
sector.” Projections for activity in the short term eroded in most
branches, pointing to stagnating activity ahead, the central bank said.

The services climate indicator was unchanged at 95 for the third
month in row, down eight points since March to the level last seen in
August 2010.

The services PMI suggested that activity stabilized in November
(49.6) after a marked drop in October (44.6). The decline in new
business was modest as well, and less than in October.

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

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