French GDP grinds to halt as German growth holds up

 
Tim Wallace
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THE FRENCH economy is looking weak with employment falling and new forecasts suggest it will not grow in the first three months of 2012.

However, Germany is on a reasonably strong footing, according to industrial production data out yesterday.

The final quarter of 2011 saw French non-farm payrolls fall by 0.1 per cent – a drop of 22,600 jobs, statistics agency INSEE reported.

Over the year as a whole 67,300 jobs were created, led by an 81,300 rise in service sector jobs but dragged down by a fall of 2,100 in industry and 11,900 in construction.

“Employment had been recovering since the downturn in 2008-09 but now seems to be slowing again,” said Barclays Capital’s Fabrice Montagne.

“Looking ahead, we see further room for stabilisation but little scope for improvement as growth is expected to remain low.”

The Bank of France confirmed it expects no growth in the first quarter of the year, and its industrial sentiment survey fell one point to 95 in February – firmly below its long-term average of 100.

Meanwhile German industrial production outperformed expectations, growing by 1.6 per cent in January, bouncing back from the 2.6 per cent contraction seen in December.

The rebound was broad based, with growth of 1.4 per cent in manufacturing, 1.7 per cent in energy and 4.3 per cent in construction, which economists believe means the economy should keep growing in the coming months.