Fears of widespread job losses in France knocked consumer confidence more than expected in October while company chiefs warned of further possible layoffs as industry demand flags, figures showed on Tuesday. Statistics office INSEE's barometer of consumer morale slid to -47, back to the level seen in July, when the reading dropped to its lowest in more than 20 years and slightly worse than the -46 expected by analysts.
Company heads surveyed in a separate quarterly report on French industry, also released by INSEE, highlighted a pick up in job cuts between July and September and pointed to the possibility of worse to come in the final quarter of the year. The gloomy prognosis from the euro zone's second-biggest economy, which analysts say could weigh on growth across 27-nation bloc, comes just before French President Nicolas Sarkozy unveils a raft of measures to boost the job market.
Having earmarked 360 billion euros in aid for the banking sector this month, Sarkozy is facing mounting pressure to do more for ordinary French people, something he will aim to address during a visit to Rethel in northern France this afternoon. "All these numbers confirm that activity in France is slowing very markedly today," said Philippe Waechter, chief economist with Natixis Asset Management.
"There is confirmation of a clear slowdown in the situation of French companies since the summer and this will translate into a deteriorating jobs market," he said. Confidence in everything from future finances to the outlook for prices worsened as expectations of rising unemployment surged to 69 from 52 in September, INSEE said. "In October, there was a clear rise in the number of households which think that unemployment will rise in the coming 12 months," INSEE said a statement.
French companies across a range of sectors including autos and real estate have been announcing job cuts to cope with the ravages of slowing growth and the global financial crisis. Mail order company Camif Particuliers, which employs 780 people in the west of the country, became one of the latest casualties after it went into liquidation on Monday.
Overall demand as well as that of foreign buyers had taken a hit in the third quarter and looked set to get worse as the year went on, INSEE said. The outlook for demand of French manufactured goods for the coming quarter hit -28, its lowest level since the second quarter of 1993.
The quarterly reading for prospects for overall industry demand sank to -25 in October from -9 previously. The mood dovetailed with monthly business confidence figures, released last week, that showed morale plumbing a 15-year low in October. "It's above all the quarterly survey that's worrying. You can see clearly that the momentum towards recession is under way from all sides," said Natacha Valla of Goldman Sachs. "Companies are expecting an intensification in job cuts, which is something that's also being felt by consumers so you've got two reflections of the worsening state of the labour market," she said.
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