French economy picks up as job creation, output surge
By Michel Rose
PARIS (Reuters) - French industrial output reached its highest level in more than four years in January and job creation last year was the fastest since 2007, data showed on Thursday.
Coming after Germany reported its fastest industrial output rise in six years this week, the data for the euro zone's second-largest economy could temper concerns that a slowdown in emerging markets is spreading to the euro zone.
French industrial output rose 1.3 percent in January from December, beating the 0.8 percent economists expected on average, to reach its highest level since December 2011, figures from the INSEE statistics agency showed on Thursday.
"Today's outcome marks a strong entry of industrial production into the quarter," UniCredit economist Tullia Bucco said in a note.
The December figure was also revised up significantly to show a dip of 0.6 percent instead of the 1.6 percent decline previously reported, with INSEE saying it had revised seasonal adjustments and weights as well as the baseline year.
Manufacturing output, which strips out the impact of volatile energy production, rose by 0.8 percent in January and was up by a strong 2.6 percent over a year, especially in the transport, electronics and agro-food sectors.
A lower euro making French goods more competitive, cheap oil prices and the government's 40 billion euro (£31 billion) tax cut package are likely to have helped boost production.
Although recent surveys by the Bank of France and private pollster Markit have pointed to weaker sentiment in February, hard data has surprised on the upside.
"It dismisses to some extent the mixed message from business surveys up to February, especially the PMIs, which may have been affected by increased by financial market volatility," Barclays economist Francois Cabau said.
In another encouraging sign for President Francois Hollande's government, the statistics office revised up the number of jobs created last year to 82,300, from 47,100 previously, the highest since the global financial crisis of 2007-2008.
By contrast, France had lost 62,800 jobs in 2014.
Finance Minister Michel Sapin struck a cautiously optimistic tone during a press briefing with reporters, saying that increases in the working population will curb any impact on the jobless rate.
"For unemployment to drop, we need to create 100,000 jobs. We're getting there," he said.
The better job creation data comes after a fall in the French unemployment rate in the fourth quarter to 10.3 percent and a sharp drop in the number of jobless people in January, giving some rare relief to Hollande who has staked his political future on the job curve.
(Additional reporting by Ingrid Melander, Yann Le Guernigou and Leigh Thomas; Editing by Toby Chopra and Andrew Callus)
