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French economy stagnant in Q1: INSEE

The French economy stagnated in the first quarter and investment continued to decline but purchasing power saw a bump, the state statistics agency said on Friday.

PARIS: The French economy stagnated in the first quarter and investment continued to decline but purchasing power saw a bump, the state statistics agency said on Friday.

Confirming an earlier estimate, INSEE said the French economy saw zero growth in the first quarter, with paltry 0.7 per cent growth expected for the whole of 2014.

It said purchasing power was up by 1.3 per cent, but consumers appeared to be setting money aside instead of putting it back into the economy.

Consumer spending was down by 0.5 per cent and the household savings rate rose to 15.9 per cent.

Corporate profit margins were up by 0.5 points to 30 per cent, it said, "the biggest increase since the start of 2010".

But companies also seemed unwilling to spend, with corporate investment down 0.6 per cent in the first quarter.

President Francois Hollande's Socialist government is struggling to turn around France's sluggish economy and stem rising joblessness.

It received more bad news on Thursday when the labour ministry said the number of registered unemployed in France suffered a big jump in May, rising by 24,800 to a new record of 3.388 million.

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