French job market weakens

French unemployment is expected to get worse before it gets better

PARIS, France -- The number of unemployed workers in France edged higher last month as companies continued to scale back operations in response to a sluggish recovery in Europe's third largest economy.

Many economists said the labour market will not improve until there are clear signs of a sustained rebound in the economy, which in unlikely before early next year.

Unemployment rose by 18,000 -- or 0.7 percent -- to 2,427,000 in July from 2,409,000 in the previous month, the French Labour Ministry said on Friday, with the jobless rate remaining at 9 percent.

The July numbers were in line with economists' forecasts but many expect unemployment to rise in the coming months.

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"I think things will get a little worse before they get better because growth is sluggish and companies are restructuring,'' Annie Andre, an economist at CIC, told Reuters. "I think the unemployment rate could go under 9.0 percent next year but not very quickly."

Jean-Louis Mourier, an economist at Aurel Leven, added: "The economic outlook will not allow jobless figures to get better before the end of the year and we should even expect a slight rise in unemployment in the coming five months."

The French government is calling for economic growth of about 0.6 percent for the third quarter and 1.5 percent for the entire year, the slowest annual rate of expansion in six years.

The 12-nation eurozone is expected to see economic growth of between 0.6 and 0.9 percent in the third quarter due to a slowdown in the retail and construction sectors, as well as a weaker-than-anticipated recovery in the U.S. economy -- the zone's biggest markets for exports.

The jobless rate in the region is running at a two-year high of 8.4 percent.

The weak economic climate has prompted many French companies to restructure their operations and cut staff.

Telecoms equipment maker Alcatel (PCGE) said it will eliminate 30,000 jobs this year, while Cap Gemini (PCAP), European biggest computer services company, is reducing its workforce by more than 5,000. Oil giant TotalFinaElf (PFP) is cutting 1,086 worker over the next three years.