France's unemployment rate held steady in the second quarter of 2008 following 15 months of continuous declines. The jobless rate stayed at 7.6 percent in the April-June period, according to data from INSEE the French statistics office. Excluding France's overseas territories, the unemployment rate was 7.2 percent, a 25-year low.
Companies are evidently becoming more reluctant to hire as consumer spending wanes, while a 46 percent rise in oil prices in the past year adds to costs. Gross domestic product fell 0.3 percent in the second quarter, and Prime Minister Francois Fillon now sees the economy growing about 1 percent this year, significantly down from a previous forecast of 2 percent.
Company investment, consumer spending and exports all declined in the euro region in the second quarter, pushing the member state economies closer to a recession. The 0.2 percent economic contraction in the three months through June was the first since the introduction of the euro almost a decade ago. Companies are also facing tighter credit conditions as the European Central Bank keeps interest rates at a seven-year high and banks remain reluctant to lend in the wake of the U.S. subprime mortgage market collapse.
In fact the French economy lost jobs for the first time in more than four years in the second quarter. The deterioration in the labor market comes at a time when inflation is accelerating at the fastest pace in 12 years, weakening consumer spending and aggravating the slowdown.
Insee also revised up the unemployment rate for the first quarter to 7.6 percent from the 7.5 percent initially reported.
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