French Economic Recovery Is Stuck

(Bloomberg) -- French economic output is plateauing at 5% below pre-crisis levels, according to the Bank of France, adding to signs the country’s recovery from lockdown is faltering.

The central bank’s monthly survey of some 8,500 companies showed little change between August and September in the level of activity in industry, services and construction. Business leaders’ comments on the outlook indicate no pickup in October either, it said.

After a sharp rebound when the government ended confinement measures in May, the French economy has shown signs of weakness in recent weeks. A resurgence in the number of coronavirus cases and a return of partial lockdown measures in some areas are making businesses and consumers increasingly wary about the near future, surveys show.

European Central Bank President Christine Lagarde has also expressed concern. She warned this week that the V-shaped recovery “we all longed for and hoped for” in the euro area will develop a “second arm,” and singled out France and Spain as faring particularly poorly.

French President Emmanuel Macron said late Wednesday his government will announce more restrictions on Thursday, similar to those in Marseille and Paris where bars have been shuttered.

“When we ask them about October, businesses are overall cautious: they expect their activity to be stable again, but the mention greater uncertainty, notably in the most affected sectors,” Bank of France Governor Francois Villeroy de Galhau said in comments to Agence France Presse.

Despite the flattening of the recovery in September, the central bank reiterated its forecast for a 16% rebound of gross domestic product in the third quarter. There are still significant disparities between sectors, it said. Most are nearing normal levels of activity, while automotive manufacturing, hotels, restaurants and recreational activities are still significantly affected by the crisis.

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