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  • Dec 31st, 2005
  • Comments Off on French government upbeat as jobless rate falls to 9.6 percent
France's unemployment rate should ease further in 2006 after falling to 9.6 percent in November, the French employment minister said on Friday, but economists cautioned that strong job creation was still lacking.

The November figures, released late on Thursday ahead of the official publication time on Friday, were good news for the conservative government, supporting optimism that its efforts to boost jobs and economic confidence were working. The steady fall in the unemployment rate from a five-year high of 10.2 in May "lets us finally envisage breaking this circle of structural unemployment that does us so much harm," Employment Minister Gerard Larcher told RTL radio.

"The nine percent jobless level will be very important psychologically. We'll see that in the second half of 2006."

The Labour Ministry said the number of people out of work in the euro zone's second largest economy fell to 2,634,000 in November from 2,665,000 the previous month, according to data based on International Labour Organisation criteria.

Analysts had expected the figures to hold steady at the 9.7 percent rate reported for October.

"It is better than expected," said Jean-Louis Mourier, economist at Aurel Leven. "The numbers are a confirmation that economic activity in France has been improving since the summer. But we do not yet see massive job creation."

Marc Touati, economist at Natexis Banques Populaires, said the data showed the French jobless rate was on a falling trend.

The government has promised to reduce high unemployment, which was seen as one of the root causes of riots by youths that hit many French suburbs in November.

"The government is ending the year on a positive note," said the business daily Les Echos, noting that the jobless figures had fallen in all categories with long-term unemployment showing the sharpest drop.

Prime Minister Dominique de Villepin's government has partly attributed the drop in unemployment to measures it unveiled to boost labour mobility and to encourage businesses to hire.

These include the introduction of a new type of contract that allows small businesses to extend the trial period for new workers to two years from several months.

National statistics office INSEE predicted earlier this month the government steps would help reduce the jobless rate to around 9.5 percent by the end of the year.

INSEE said it expected unemployment to extend its fall to 9.3 percent by the end of the first quarter of 2006 and 9.2 percent by the end of June, and Larcher cited these projections approvingly in his RTL interview.

Copyright Reuters, 2005


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