Employment edges higher in France

Consumer spending is expected to stay strong

The number of people in work in France crept up in the first three months of this year, bringing good news to newly returned centre-right president Jacques Chirac.

Although jobs in industry continued to evaporate, the figures from French government statistics agency INSEE showed service sector jobs were more than filling the gap, with overall employment up 0.2% over the previous quarter.

Economists said the data could indicate that consumer spending is likely to stay strong, an important factor if the recovery from last year's downturn is to be sustained.

But other data released by INSEE showed that investment spending is still expected to fall this year.

Spend, spend, spend

The keenness of French shoppers to spend could help offset a decline in investment.

INSEE reported on Friday that its survey of industry experts saw investment slipping 2% this year after last year's stagnation.

The number is a slight improvement from the results of last month's sounding of more than 2,000 companies in France, which had suggested a 3% fall in 2002.

But it accompanied trade figures showing that while France is continuing to export more than it imports, the volume of both is down.

"The drop ... shows despite the increase in oil prices shows that the international economic rebound has not affected trade yet," said Nicolas Claquin, an economist at CCF in Paris.

And the lack of confidence about investment, he suggested, indicated that the rebound is probably going to be delayed till 2003, with growth this year of 1.2%.

"This shows we cannot count on investment as a driver of growth in 2002," he said.

Impending polls

Overall the figures offer a nugget of good news to President Chirac.

Mr Chirac is hoping his allies will win parliamentary elections due early next month, bringing five years of "cohabitation" with the left to an end.

Signs of an improving economy would normally be of more help to the Socialist Party, whose parliamentary majority meant it, rather than the Presidency, had the final say on economy policy.

But the party's disastrous showing in the presidential poll - Prime Minister Lionel Jospin was knocked out of the race by Jean Marie Le Pen - means Mr Chirac may be able to take the credit.