PARIS (MNI) – French economic activity picked up across the board
in December and near-term prospects point to sustained growth in the
months ahead, the Bank of France said Tuesday, citing the results of its
monthly business survey.

After slowing to 0.3% in 3Q, quarterly GDP growth should accelerate
in 4Q to 0.6%, the central bank said, confirming its projection from
last month. Last month, the national statistics institute Insee forecast
+0.5%.

The Bank of France’s survey suggested that industry output expanded
in all main sectors in December except for pharmaceuticals. After a
1.3-point rebound, capacity utilization stabilized at November’s
two-year high of 78.2% — still nearly four points below the long-term
average.

The bank’s sector climate indictor, based on the latest three
months’ results, gained another point in December to a three-year high
of 108. Most analysts had expected little change but were split on the
direction.

With order books judged “firmer” overall, production expectations
“point to an acceleration of activity in the coming months,” the central
bank said. All branches are likely to benefit, especially electronics
and high-tech equipment.

Apart from the transport sector, activity in the services expanded
as well and is expected to continue to do so in the near term, creating
demand for additional staff. Prices appear to have remained unchanged in
December, the central bank observed.

The service sector climate index rose one point to 99, the highest
level since May 2008.

As the services production outlook for December fell three points,
the central bank merely forecast “continued growth” in the coming
months.

The results of the bank’s December retail survey are to be released
next Monday.

Insee’s latest industry survey also signaled a pick-up in recent
output. Production prospects recovered as well, though mainly in the
clothing branch and the auto industry, where the expiration of public
buying incentives at the end of last year boosted orders sharply. The
December factory PMI flagged dynamic growth in both output (59.3) and
new orders (59.1).

Service providers polled by Insee in December were also more upbeat
about recent and expected activity, especially for hotels and
restaurants, specialized and technical activities, and retailing. Car
dealers and repair shops, however, expected a slowdown after the
year-end surge in sales. The services PMI signaled further moderate
growth in activity (54.9) and a rebound in new business (56.8).

The promising outlook for demand is clouded by the likely slump in
new car sales and perhaps a broader retrenchment in consumption after
the spending spree at year’s end. Once the backlog in car orders is
worked off, the sector will no doubt face anemic demand for some time,
which will weigh on industry’s overall performance.

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

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