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Thursday, October 23, 2008

French Business Confidence Hits Lowest Level Since December 1993

French business confidence fell to the lowest in almost 15 years as the global credit crisis worsened, threatening to deepen a likely recession in the euro region's second-largest economy.

An index of sentiment among 4,000 manufacturers declined to 88 in October from 91 the previous month, according to Insee, the Paris-based national statistics office. The reading was the lowest since December 1993.

The report also showed that manufacturers expect their prices to fall for a second month as crude oil and commodities costs retreat. Crude prices have shed more than 50 percent since a July 11 record of $147.27 a barrel, helping bring France's inflation rate to 3.3 percent in September from a 12-year high of 4 percent in July. Declining prices have cheered households.

Consumer spending on manufactured goods, which accounts for about 15 percent of the economy, unexpectedly rose 0.6 percent in September after a 0.2 percent decline in August, a separate Insee report showed. The increase in September left third-quarter spending up 0.7 percent after stagnating in April-June, Insee said.

Even allowing for the increase in consumer spending, Insee maintained its estimate that the French economy contracted 0.1 percent in the third quarter, meaning that France entered its first recession in more than 15 years on 1 April 2008.

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