French recovery on track as consumers unfazed by strikes
By Leigh Thomas PARIS (Reuters) - Wracked by fears about rising unemployment for years, French households are at long last turning more optimistic, keeping an economic recovery on track despite waves of strikes and protests over a contested labor reform. The official consumer confidence index published on Friday surged well past even the highest estimate to reach the highest level since October 2007, before the global financial crisis broke. Less than a year from a presidential election, the timing could not be better for President Francois Hollande with his Socialist government locked in a showdown with the hardline CGT union over its plans to ease labor regulations. Perhaps most inspiring for Hollande, who has said he would not run for re-election unless unemployment falls, the confidence survey saw joblessness concerns drop to the lowest level since June 2008. Households' view on their standard of living also returned to pre-crisis levels, suggesting that they may be beginning to buy into Hollande's much-mocked recent claim that "things are going better". "You'd really have to be a killjoy to say it's not getting better," economist Denis Ferrand at COE-Rexecode told Reuters. In Paris for an annual review of the French economy, IMF France mission chief Christian Mumssen said this week that consumers' purchasing power was improving against the background of solid wage growth and virtually no inflation. What's more, companies are also turning cautiously more optimistic. Business activity recovered in May to levels not seen since the Nov. 13 attacks in around Paris in which 130 people died, according a closely watched monthly survey of purchasing managers. STRIKES Though strikes are hitting production in the energy sector, an output spike in April amid unseasonably frigid weather may help smooth out the average over the course of the quarter, impacting overall growth less than could be feared. "In the short-term, the impact of the strikes is probably very limited," COE-Rexecode's Ferrand said, noting that the much-more paralyzing strikes of 1995 had only shaved 0.2 percentage points off GDP. "At most we'll lose the extra 0.1 point we were supposed to gain from the higher number of business days this year." One of the most encouraging signs for the economy came on Wednesday when monthly jobless data showed the number of registered job-seekers had fallen in April for the second month in a row. "Monthly job-seeker figures are usually volatile but there is nonetheless a clear inflexion in the trend," the OFCE economics think tanks wrote in a note, pointing out that the decline in April was the first over 12 months since Lehman Brothers went bankrupt in September 2008. The improving labor market should help consumer spending which already grew a hearty 1.2 percent in the first quarter, the strongest quarter since late 2004. Also playing in the economy's favor are the European football championships that France will be hosting from June 10 for a month with all of the extra spending by football fans from across Europe. And, as the IMF's Mumssen noted, "If France wins the cup then we would expect very strong consumption." (Additional reporting by Michel Rose Editing by Jeremy Gaunt)
