–Adds 1Q Results For Industry Profits, Construction And Wholesaling,

PARIS (MNI) – French economic activity picked up somewhat in March
but is likely to stagnate in the near term, the Bank of France said
Tuesday, citing the results of its monthly business survey.

The central bank estimated that GDP was flat in 1Q, confirming its
previous forecasts. Last month, the national statistics Institute Insee
also projected no growth in 1Q.

The central bank’s latest survey indicated that industry output
“improved” in March. Solid gains were reported for high-tech goods,
heavy transport equipment, chemicals, pharmaceuticals, and wood and
printing. After five months of decline, capacity utilization edged up
0.1 point to 78.5% — still well below average.

The central bank’s sector climate indicator, based on the latest
three months’ results, was unchanged in March at february’s 28-month low
of 95. Most analysts had expected a modest recovery.

Order books were close to normal levels and finished goods stocks
slightly above target. Firms’ outlook for overall production in April
fell five points to +1, which the central bank interpreted as a signal
for stable activity in the short term. There was little overall change
in orders.

Other leading indicators for industry give conflicting signals. The
factory PMI plunged to a three-year low of 46.7, with output (45.6) and
new orders (43.4) contracting sharply. While Insee’s manufacturing
survey also flagged a steeper decline in recent output, firms’
assessment of order books, especially for exports, recovered and their
near-term output jumped to a six-month high.

France’s services sector regained some steam in March, with a boost
from transport and engineering, the central bank said, adding that
hiring accelerated and prices rose very slightly.

The outlook for services activity also fell five points to zero,
signalling “stable” activity ahead. The services climate indicator was
unchanged on the month at 93.

France’s services PMI edged up 0.1 point in March to 50.1, with new
orders practically flat (50.2). Insee’s sector survey signaled a pick-up
in recent activity in March, but providers remained pessimistic about
near-term prospects.

The quarterly supplement to the central bank’s survey showed that
industry investment recovered slightly in 1Q from the two-year low in 4Q
and is expect to continue higher in 2Q. Firms’ cash positions stabilized
close to long-term averages. Profit margins narrowed slightly and gross
operating profits declined.

In construction, growth slowed in 1Q after a pick-up in 4Q and is
seen roughly steady in 2Q. Order books remained at satisfactory levels.
The central bank’s sentiment index slipped one point to 96.

In wholesaling, purchases and turnover were little changed in real
terms in 1Q. Sales are expected to stagnate in 2Q. Order books were
unchanged and inventories appeared to have increased. The sector
sentiment index dropped four points to 94.

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

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