French jobless rate edges lower
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Jobless lines were slightly shorter in France in January.
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PARIS, France (Reuters) -- France's jobless rate fell slightly in January, prompting the government to herald a recovery in the euro zone's second largest economy and reject most analysts' belief that the improvement was purely technical.
The small drop in unemployment was due mainly to people being removed from the register and did not reflect a rise in job creation, economists said on Friday.
Labor Minister Francois Fillon challenged this interpretation ahead of regional elections which are seen as a test of the conservative government, in power for two years.
Fillon said in a statement that attributing the improvement solely to a reform in the unemployment benefit system was "inaccurate and misleading.''
France's jobless rate fell in January to 9.6 percent from 9.7 percent in December, according to data from the Labor Ministry, which released the figures on Thursday before official publication after they were leaked to French media.
"This drop in unemployment is deceptive and is due mainly to technical factors,'' said Marc Touati, economist at Natexis Banques Populaires. He said a large number of people had been struck from jobless registers at the start of the year.
"Despite the recovery, job prospects in industry remain negative. French companies are waiting to see growth consolidated before hiring,'' Touati added.
The leader of the opposition Socialists suggested the government was using the data for electoral purposes.
"This famous drop in unemployment...is due to the number of people struck off the registers who are being discouraged or barred from signing on,'' Francois Hollande told LCI television.
Fillon countered that in addition to those struck from registers, the figures showed a rise in people finding jobs, a drop in layoffs, more job offers and fewer people signing on.
"In actual fact, all the economic indicators point in the same direction. The effects of the recovery are starting to be felt. The improvement in the job situation should therefore be confirmed in the coming months,'' the minister said.
The January jobless figures provide the last snapshot of the labor market before the regional polls, due to take place on March 21 and 28. Unemployment figures for February are scheduled to be published on March 31.
Improvement in sight
The number of people officially registered as out of work fell by 23,000, down 0.9 percent month-on-month, to 2,612,000 on the basis of International Labour Organization criteria.
The drop in the headline jobless rate beat the forecasts of economists polled by Reuters, who had expected it to be stable. None the less, the unemployment rate in France remained well above the euro zone level of 8.8 percent.
President Jacques Chirac has declared employment a top priority for 2004.
Prime Minister Jean-Pierre Raffarin said on Thursday jobless levels had stabilized and should fall in the second half of the year, as the economy picks up after skirting recession in 2003.
Economists cautioned that while the services sector continues to create new jobs, industry lagged behind.
"If we see a reduction in unemployment this year, which I am not certain we will, it won't happen before the second half of the year,'' said Philippe Waechter, chief economist at Natexis Asset Management.
"In industry, it is clear that unless we achieve growth of at least 2.0-2.5 percent, it will be very hard to create jobs.''
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