Paris: French business confidence fell in February on concern that growth may slow as President Nicolas Sarkozy's government phases out economic stimulus measures.
The Bank of France's Business Sentiment Indicator for manufacturing dropped to 102 from 104 last month, the central bank said yesterday in a statement. Economists had expected the indicator to be unchanged, according to a Bloomberg News survey. Service industry sentiment rose to 90 from 89 in January.
The decline snaps 13 straight months of gains fuelled by stimulus measures aimed at fighting France's deepest recession since the Second World War. Sarkozy is cutting the programme to about 4.1 billion euros (Dh20.54 billion) this year from 15.1 billion in 2009, causing consumer spending to sputter early this year.
"Confidence has improved a lot, so it's normal that we're experiencing a correction now," said Dominique Barbet, an economist at BNP Paribas.
"This may be the dip in the wave, with the economy picking up again in the second quarter."
Hardest hit
The car industry is among the hardest hit by the withdrawal of the stimulus programme. The government offered 1,000 euros for every 10-year-old car traded in for a new one last year, with the subsidy dropping to 700 euros in January.
As a result, motorists brought forward purchases, driving a 0.6 per cent expansion of the economy in the fourth quarter. Now demand is waning, with spending on manufactured goods dropping 2.7 per cent in January.
