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French business morale hits low
PARIS, France (Reuters) -- French business morale fell to a six-month low in September, with company executives particularly negative about order books and the outlook for the future, the national statistics office INSEE said on Thursday. INSEE said its catch-all composite business climate index, based on monthly surveys of some 4,500 business leaders, fell to 96 in September, its lowest level since March, versus a reading of 98 for July. The September reading was bang in line with a forecast from economists polled by Reuters. INSEE did not conduct a survey during the summer holiday month of August. Economists said the survey indicated business leaders had lost hope that the French economy would recover in the second half of 2002, although morale was not as bad as during the aftermath of the September 11 attacks on the United States. "There are really no encouraging signs in this survey,'' said Olivier Gasnier, economist at Societe Generale. "All the improvement, which was founded on hopes of a global recovery in the United States and Europe, has evaporated and we are in a configuration which could charitably be described as cautious, but which is not very positive,'' he added. The company chiefs surveyed were negative about the outlook for business. INSEE said its ``general outlook'' business confidence index fell sharply to minus 26 in September from a reading of minus 16 in July. The indices reflecting confidence about global and foreign orders also registered a sharp deterioration, both falling by seven points to minus 27 and minus 20 respectively. A positive figure shows the percentage points by which the percentage of respondents saying things had improved or risen outnumbered the percentage saying things had worsened. "The drop is less marked than we were expecting, but this deterioration in confidence is nonetheless clear and comes very soon after the recent cycle of recovery, which is unusual,'' noted David Naude, economist at Deutsche Bank. France's 2003 budget, unveiled on Wednesday, included a series of measures aimed at easing charges on employers in a bid to stimulate investment and curb unemployment, which remains stubbornly high at 9.0 percent. The government said the budget was based on lower-than-expected growth of 2.5 percent, down from 3.0 percent initially, which meant it would not be able to bring down the public deficit from 2.6 percent of gross domestic product, the level it is expected to reach in 2002. "The international climate and the stock market crisis point towards a difficult year-end. No major upturn in confidence should be expected between now and the end of 2002,'' predicted Nicolas Claquin, economist at CCF.
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