French unemployment unexpectedly rose to a five-year high of 10 per cent in January and business morale fell in February, figures showed today.
State statistics office INSEE said its monthly business climate index fell to 104 in February from 105 in January - falling below market expectations for no change.
"The responses of company chiefs questioned in February 2005 testify to an industrial environment lacking drive," INSEE said in a statement.
The Labour Ministry said the seasonally adjusted unemployment figures in France in January rose by 23,000, or 0.9 per cent month-on-month, to 2,716,000, according to data based on International Labour Organisation (ILO) criteria.
The rise in the unemployment rate, which remains well above the euro zone average, is a setback for Prime Minister Mr Jean-Pierre Raffarin's conservative government.
Mr Raffin vowed to cut joblessness to around 9 per cent this year. The unemployment rise shows French firms' reluctance to hire new workers despite a strong performance by the economy in the final quarter of last year, when it grew by 0.8 per cent.
The weaker business morale reading followed a surprise fall in the German Ifo institute's gauge of business confidence for February, which was released on Wednesday.
Germany and France are the euro zone's two biggest economies and together account for about half the currency area's output.