Business confidence up

French business confidence improved sharply and unexpectedly this month. The closely watched composite business climate index in March jumped four points to 95, the National Statistics Institute (INSEE) reported on Friday.

Although the rise of the indicator still left it below the long-term average of 100 points, the marked improvement came as a surprise to analysts, who had previously expected business confidence to come in at a lackluster 93 points.

The individual index measuring demand and total order levels in French companies improved by three points, while the index for export opportunities experienced a robust improvement of 18 points over February levels.

"Looking at the personal production outlook, which improved markedly, activity in the manufacturing industry looks set to be more dynamic in the next months," INSEE commented on Friday.

No recession in sight

The separate index for the services sector rose by two points, while that for retail trade climbed three points. By contrast, the construction indicator dipped one point to 98.

In the run-up to the presidential elections, the French government increased its economic growth forecast for this year to 0.7 percent, slightly better than its former forecast of 0.5 percent.

President Nicolas Sarkozy's government became more optimistic about economic developments in 2012 after the National Statistics Institute upgraded its own forecast for the first half of the current year, adding that the economy was likely to expand by 0.2 percent in the second quarter, followed by stronger growth later in the year.

INSEE had previously expected France to enter a mild recession, but revised its estimates, adding that growth would also continue into 2013. The French government, however, trimmed its forecast for 2013, saying growth would be around 1.75 percent, instead of the two percent previously predicted.

hg / gb (AFP, Reuters)