French industry demand is expected to be dynamic in the third quarter, with overseas markets expected to hold up despite the strength of the euro, a survey showed on Monday. An index measuring business chiefs' expectations for industry demand rose to 17 in national statistics office INSEE's July survey, from 14 in the previous quarter's poll.
"Industrialists consider that French industry's competitiveness improved across all markets during the second quarter of 2007," INSEE said. "The general outlook for exports continued to improve slightly."
The report appears at odds with President Nicolas Sarkozy's repeated complaints about the damage which the euro's rise to record highs against the dollar and the yen is inflicting on exports by making them more expensive in foreign currency terms.
The explanation lies in healthy global economic activity, according to analysts. "The strength of external demand, and particularly within the euro area, is just completely offsetting any of the increase in the euro that we've seen," said Dominic White, economist at ABN Amro in London.
Foreign orders encompass orders from within the euro zone as well as from countries outside the bloc. Economists also suggested firms' confidence partly reflected their strategies to cope with the euro's strength and competition from countries with low labour costs, including relocating production abroad. "For a long time now there has been a divergence between actual industrial production and business confidence," said Dominique Barbet, senior economist at BNP Paribas in Paris.