French Data Improved But Only When Seasonally Adjusted.

Over the last seven years, the situation in the Eurozone is deteriorating. France is not an exception in the continent and the total number of French jobseekers has increased by more than 80% during this period. In 2008, around 2 million people were actively looking for a job while this number currently holds above 3.5 million. Last week data, the jobseekers net change, showed a diminution of 23’800 jobseekers. However, we remain very skeptical regarding those numbers. In the official report from the jobs minister, there are 166’000 more people looking for a job than the previous month. The only adjustments have been seasonal. New graduates for example have been removed from this number for example. And it is the way we get this improvement. Actually, the labour market conditions are not getting better. Air France, Fram (the travel agencies), symbols of those issues, are either closing (Fram) or restructuring (Air France). We believe that the increasing unemployment ongoing trend is not going to stop any time soon. France is still paying the price of the deindustrialization. Its trade deficit remains very large at around 3€ billion. Plus, the inability to debase its currency to be more competitive only paves the way to more austerity policies. A quick look at the exploding French debt-to-GDP ratio shows the French difficulties.  Officials were saying that a healthy modern economy was not sustainable with a ratio above 90%. What could we say now that the ratio is way above this threshold? The widening trade deficit increases deflation pressures which will weaken even more the labour market. Indeed, wages will be driven lower in an oversupply of jobs applicants. As a result of this vicious circle, retail sales are set to decrease again, after a low read in September. France is definitely expecting a lot from the ECB QE.
Regards All.

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