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Technology Stocks : Alcatel (ALA) and France -- Ignore unavailable to you. Want to Upgrade?

To: Pakman2000 who wrote (126)	10/28/1998 11:21:00 AM
From: Steve Fancy	Respond to of 3891

French Data To Show Little Need For Rate Cut - Economists October 28, 1998 By ALAN R. KATZ Dow Jones Newswires PARIS -- This week's French economic data will provide few grounds for a move by the Bank of France on interest rates, economists say. Although the indicators may suggest economic activity will slow this winter, domestic demand remains sturdy enough for France's economic expansion of the past two years to continue through next year. Insee, the French statistics institute, will release September consumer spending data Thursday, and Friday, unemployment data for September. These figures follow a survey of business leaders Wednesday, which showed French companies expecting industrial output to contract in the months ahead after activity, particularly in the export-sensitive manufacturing sector, eased in September-October. Opinion on demand slipped to its lowest level since October 1997, but remained above its long-term average. As for the rest of the week's data, economists expect consumer spending in September to show a rise of 1.5% and September unemployment is seen remaining steady at 11.8%. None gives good reason for the Bank of France to ease its repurchase rate below 3.30%, the economists said. "The October Insee survey signals a significant slowdown in the French manufacturing sector - the drop of overseas demand explains most of the slowdown - ... (but) by itself, the slowdown isn't sufficient to trigger a monetary easing in" France and Germany, said Morgan Stanley economist Eric Chaney in a research note. Robert Prior, European economist at HSBC Securities in London noted that "monetary policy is already quite loose across Europe. There is no real need for central banks to cut rates and I don't expect the European central bank to do anything significant in anytime soon.' Economists expect the declining trend in unemployment to remain intact in 1999 even though the jobless rate held steady in August and is likely to have done so again in September. "We estimate that it would take growth below 1.7% in 1999 to reverse the unemployment trend. That's not a credible estimate. Growth is more likely to be between 2.0% and 2.5%," Herve Goulletquer, chief economist for Credit Lyonnais in Paris. The government is forecasting gross domestic product growth of 3.0% in 1998 and 2.7% in 1999. Goulletquer is slightly more optimistic than the average on the unemployment trend, estimating that French unemployment fell to 11.7% in September. While France's economy remains fairly resilient, however, indications are increasing that Germany's economy may be seeing a less favorable trend. This, economists say, could prompt the Bundesbank to cut its securities repurchase rate, which in turn could put pressure on the Bank of France to cut its rates. -By Alan R. Katz; 331.53.00.03.03; akatz@ap.org