BBC News Online: Business

French jobless rate still rising

Analysts say unemployment has not yet spiked

Analysts expect the jobless rate to continue rising at a rapid pace.

The data suggested that unemployment was not in a "stabilisation phase" as the government had thought in August, the Labour Ministry's Elisabeth Guigou said in an interview with French radio.

It "should lead us to be much more vigilant and to intensify our policies" aimed at reducing unemployment, Ms Guigou said.

Unemployment jumped in September to 9.1%, its highest level since November 2000.

Reasons for the rise

The Labour Ministry blamed the global slowdown for the rise.

"The events of 11 September are weighing on the morale and the decisions of business investors," said Ms Guigou.

Stephane Deo at UBS Warburg added that "the rise in unemployment owes much to the dynamism of the labour force".

"The French labour market is now paying the price for its flexibility with a faster adjustment to the cycle."

Stimulus

Last month, France defied calls from the European Union for strict controls on government spending by announcing plans to inject 1.2bn euros into its economy during 2002.

Recession fears have risen in France in recent months, forcing the government to scale back its growth prediction for 2001 to 2%.