Signs that business confidence is picking up in one of the euro-zone's largest economies has given new confidence to economists expecting a rapid recovery in growth.
The Insee survey of business confidence in France, released yesterday, showed output expectations which track closely actual manufacturing production, leapt in June to their highest level since September 1998.
Stocks of unsold goods held by companies fell sharply, suggesting that many businesses have cleared out their excess inventories and are planning to increase production.
The balance of companies anticipating an increase in output was sharply up on the previous two months. Insee figures showed the balance was plus 14 for June against plus 7 in May and plus 4 in April.
Predictions of a rapid recovery in consumer demand in the second half of 1999 also gained comfort from robust euro-zone money supply data released yesterday. The figures for May showed the broad M3 measure rose by an annual rate of 5.3 per cent.
On the European Central Bank's preferred three-month moving average measure, money supply growth rose from 5.1 per cent in April to 5.2 per cent in May. Credit extended to euro-zone residents rose by 10.5 per cent in the year to May compared with 10 per cent in April, suggesting households are increasing their borrowings to finance consumption.
