Mixed signals from French economy

The French economy picked up speed at the end of 2004, official figures show - but still looks set to have fallen short of the government's hopes.

According to state statistics body INSEE, growth for the three months to December was a seasonally-adjusted 0.7-0.8%, ahead of the 0.6% forecast. If confirmed, that would be the best quarterly showing since early 2002. It leaves GDP up 2.3% for the full year, but short of the 2.5% which the French government had predicted.

Despite the apparent shortfall in annual economic growth, the good quarterly figures - a so-called "flash estimate" - mark a continuing trend of improving indicators for the health of the French economy. The government is reiterating a 2.5% target for 2005, while the European Central Bank is making positive noises for the 12-nation eurozone as a whole. Also on Friday, France's industrial output for December was released, showing 0.7% growth. "The numbers are good," said David Naude, economist at Deutsche Bank. "They send a positive signal of a rebound in output... and open the way for a continuation in that trend into the New Year." Service sector activity improved in January, hitting a seven-month high. But unemployment remains high at about 10%.