French business confidence up on government incentives and exports

11-10-2009 08:06

French business sentiment rose for an eighth month on the back of government incentives and exports, while the French economy is expected to grow by 0.5% in the last quarter of this year, the French central bank reported. Earlier estimations showed a 0.3% growth for the fourth quarter.

French business confidence

The central bank’s Business Sentiment Indicator for manufacturing rose to 95 last month, in comparison to a corrected 93 in September, according to this Monday’s figures. The median of six forecasts showed that economists had estimated a reading of 93. The sentiment gauge regarding services remained unchanged at 84.

French GDP

Banque de France, the French central bank, reported that the French gross domestic product rose by 0.3% in the second quarter, while it contracted for four quarters. The French GDP is expected to expand by 0.5% in the fourth quarter of this year. In October, the central bank had estimated a 0.3% expansion for the final three months of 2009. These kind of figures obviously affect Forex trading.

Government incentives and exports

It is expected that the French gross domestic product will show a 0.6% growth from July through September, proved by the median of forecasts by economists. The figures regarding the third-quarter gross domestic product will be published on November 13.

French companies were favored by renewed expansion in the second quarter, as they have been suffering from last year’s economic slump. Economists believe that the fifth largest economy in the world will continue its economic growth in the fourth quarter of 2009, as exports rise and government stimulus boost automobile sales.

Full support

Pierre-Olivier Beffy, chief economist at Exane BNP Paribas, commented: “The worldwide production outlook is recovering and orders are improving gradually. Monetary and fiscal incentives provide the French economy full support.” The nation’s cash-for-clunkers scheme boosted car sales that climbed by 20% in October. French exports jumped 2.2% to € 29.1 billion in September, which are the most recent available figures.
September’s business sentiment reading was corrected from the 92 reported earlier.