|
|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
The Auto Beat
Byte of the Apple
Europe Insight
Eye on Asia
Getting In
Investing Insights
The New Entrepreneur
NEXT: Innovation Tools & Trends
On Media
Technology at Work
The Tech Beat
Traveler's Check
TECHNOLOGY
Product Reviews
Tech Stats
Hands On
AUTOS
Home Page
Auto Reviews
Car Care & Safety
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip FINANCE Investing: Europe Annual Reports Bloomberg BW50 SCOREBOARDS Hot Growth Companies: 2008 Mutual Funds Info Tech 100 B-SCHOOLS Undergrad Programs Rankings & Profiles |  |
MAY 17, 2004
France: A Stronger Economy On A Fragile Footing France's economy is picking up strength, but the rewards are not yet accruing to the nation's workforce. As a result, French business executives are growing upbeat, but the mood among consumers is still dour. The split could curb demand later on. Real gross domestic product grew by 0.7% in the fourth quarter, and overall growth in 2003's second half was revised up sharply from initial estimates. Private economists think preliminary data to be released on May 12 will show real GDP expanded another 0.5% or so in the first quarter. France is growing faster than the total euro zone. Demand in 2004's first half should be helped by a rebound in exports, now that the euro has dropped 6% against the U.S. dollar since February. Better export prospects are fueling the brighter mood among executives. The April reading on overall business confidence remained at 104, the highest in three years. And last month's purchasing managers' index showed factory activity improving with output, orders, and foreign demand all strengthening.  The PMI survey, however, showed no improvement in jobs, and therein lies the root of pessimism among France's consumers. Hiring prospects are few, and the unemployment rate in March stayed at a high 9.8%. The survey of consumer confidence has recently been revised, meaning no historical data are available, but the new index has shown little improvement over the past five months because of job jitters, as well as renewed fears over terrorism. In April, the index rose to -20, from -22 in March.The danger is that consumers, whose spending makes up about 55% of GDP, will curtail their purchases unless the job situation turns around. Already the 2.3% drop in April vehicle sales has been blamed on job jitters. And both February and March spending on manufactured goods fell. The French government cannot risk any slowdown in economic growth and the attendant weakening in tax collections. The budget deficit hit 4.1% of GDP last year, far above the European Union's limit of 3%. The government has pledged to get the deficit below 3% by 2005. But any falloff in tax revenues will complicate that goal.  By James C. Cooper & Kathleen Madigan Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2004, Bloomberg L.P.Terms of Use | Privacy Notice |
Printer-Friendly Version
