French Business Sentiment Rises, but Still Close to 3-Year Low

By Nina Koeppen and Gabriele Parussini

French business sentiment bounced back in November, but remained close to its lowest level in three years, the national statistics bureau said Friday, suggesting that growth in the euro zone's second-largest economy remains weak.

The index for the business environment among industrialists was 88, Insee said, up from 85 in October. Analysts surveyed by Dow Jones Newswires had predicted a 86 reading for the indicator.

"According to company managers in November, the outlook in industry remains badly oriented, despite a slight amelioration of the indicator," Insee said.

That comes after a closely watched survey from data provider Markit showed Thursday that business activity in Germany and the broader euro zone continued to shrink in November, indicating the region's economic downturn is steepening even as other big economies, including the U.S. and China, show signs of resurgence.

The weakness in Germany's economy was also highlighted by Friday's release of gross domestic product data. Although the euro zone's largest economy outperformed many of its peers in the third quarter--German GDP expanded 0.2% from the previous quarter--growth remained heavily dependent on exports.

But slack corporate investment and weakening foreign demand for German goods are expected to push down German GDP towards the end of the year. Investment in machinery and equipment dropped for the fourth straight quarter, declining 2.0% from the second quarter, data from the federal statistics office showed Friday.

Compounding the problems for Germany, several blue-chip firms have already announced large-scale cost cuts, including engineering conglomerate Siemens AG (SI), car giant Daimler AG (DAI.XE), airline Deutsche Lufthansa AG (LHA.XE)and Deutsche Bank AG (DB).

Write to Nina Koeppen at [e-mail] and Gabriele Parussini at [e-mail]