Jan. 26 (Bloomberg) -- French consumer confidence unexpectedly climbed from its lowest in almost three years, suggesting Europe’s second-largest economy may be stabilizing amid predictions of a recession.
A measure of sentiment rose to 81 in January from 80 in December, national statistics office Insee in Paris said today. Economists expected a reading of 80, according to 13 forecasts gathered by Bloomberg News.
The increase is a sign that while France may have entered a recession, the slump is unlikely to deepen. By cutting interest rates twice since October and offering banks unlimited loans for three years, the European Central Bank’s stimulus may be starting to seep through to businesses, providing financing and boosting confidence, economists said.
The French economy is probably already in recession, with output shrinking in the last quarter and the current one, Insee said last month. Business confidence dropped to the lowest in almost two years this month as President Nicolas Sarkozy looks for ways to cut labor costs and reduce France’s budget deficit.
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