French firms cautious but resilient amid gloom

01 Sep, 2008

Big and listed or small and private, companies at the French employers federation's annual get-together expect turbulence ahead but painted a less gloomy picture of the economy than dire headlines might suggest.
"We feel that companies are recruiting less than at the beginning of the year and that they are more prudent," said Fabrice de Saint Sauveur, head of the Paris office of temporary staffing group Manpower, but said prospects were not bad.
"The basis of the world economy is still tilted to the upside. I think we will see a stagnation in the third and fourth quarters and that things will pick up from there," he said.
French gross domestic product contracted 0.3 percent in the second quarter bringing the eurozone's second-biggest economy to the brink of recession and the main indicator of business morale has hit its lowest level in three years.
Companies have had to struggle with high oil prices, a strong euro and turmoil spilling over from the US housing and credit crisis, while consumers face higher prices and a slackening housing market.
Many firms have cut back spending plans, although a survey by statistics office INSEE this week showed most industrial groups expected to increase investment this year, albeit by not as much as they expected three months ago.
But companies attending the annual Medef pow-wow on the leafy campus of the prestigious Ecole Polytechnique - a broad cross-section of French business - were mostly cautious rather than depressed about medium-term prospects.
At one end of the scale, the head of Rhodia, a speciality chemicals company with sales of over 5 billion euros ($7.37 billion) that supplies sectors from tyres to perfumes, said there was plenty of pessimism about. "We're looking very carefully at the current situation because people are much more worried than they were a couple of months ago regarding the situation of the global economy," said Jean-Pierre Clamadieu, Rhodia's chief executive.
"But when I look at my order book today, I don't see actual changes," he said.
At the other end, Francois Moutot, who heads APCM, a small business group weighted towards the building sector said new construction jobs were slowing down but the sector was still holding up so far.

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