French Job Creation Edges Up in Third Quarter

French job creation improved in the third quarter but grew more slowly than in the previous three months, national statistics office INSEE said on Friday, which analysts said tended to confirm a slowdown is on its way.

INSEE said non-farm payrolls grew 0.2 percent in the three months to Sept. 30, a rise of 1.6 percent year-on-year, and it revised its figure for the previous quarter up to 0.4 percent from a previously reported 0.3 percent.

"There is a sharp slowdown in job creation, as companies realize there will be a slowdown at year end," said Alexander Law, chief economist at financial consultancy Xerfi.

"It is a sign last summer's turmoil in the financial markets is weighing on French job creation," he added.

The French government has expressed its satisfaction at recent data which has shown a rebound in growth in the third quarter and a continued fall in unemployment, which dipped to a 4-1/2 year low of 8.4 percent in the same period.

However, that data has failed to quash analysts' predictions that growth will not reach the government's target range of 2.0 to 2.5 percent for 2007, a view supported by a monthly Bank of France survey released on Thursday.

In that report, the national bank said the French economy should grow by 0.6 percent in the fourth quarter to give average annual growth of 1.9 percent for this year.

The fastest job creation occurred in the construction industry, which saw an annual increase of 4.3 percent, and services, which gained 2.2 percent, with temporary work in services rising 3.9 percent, INSEE said.

By contrast, industry fell 1.2 percent and manufacturing industry fell 1.4 percent.

"It is a bit below our expectations. We are still on a moderate growth trend, but one that's not so negligible (when looked at) over the year," said Jean-Louis Mourier, an economist at Aurel Leven, adding that there had been productivity gains.

"We maintain nevertheless our scenario of a slight slowdown in job creation in the coming months," he added.