The fall in French job creation stabilises



Non farm payrolls (Q3)
Actual: +0.3%qoq,+2.4%yoy
UBS Warburg: Flat qoq,+2.1%yoy
Consensus: +0.1%qoq,+2.2%yoy       
Previous: +0.3%qoq,+3.1%yoy



Non farm payrolls are clearly a good surprise as we expected the growth 
rate to continue to plummet. However, the fall in labour productivity and 
the results from surveys lead us to believe that employment growth will 
continue to slow. This underpins our pessimistic scenario for Franc in the 
coming months. 



* Non farm payrolls are better than expected. But, after a 1.0% qoq growth 
recorded in Q4 last year, 0.8% in Q1 and 0.3% in Q2 and Q3 job creation is 
much less dynamic.


* The number also show that the sharp increase in unemployment was partly 
due to an unusually high dynamism of the labour force on the wake of the 
suppression of the military service.


* During the first two quarters of the year, job creation was faster than 
GDP resulting in a fall in labour productivity. With growth expected at 
0.3% in Q3, non farm payrolls suggest that France could register a third 
(marginal) fall in labour productivity. This calls for a correction. Job 
creation growth could fall quicker in the coming quarters.


* Job growth was essentially driven by the service sector. Since 1995, more 
than 95% of the new jobs were created in that sector. The deceleration also 
comes from this sector. After a growth pick at 1.2%qoq in 00Q4, growth was 
only 0.5 % in Q3 this year. This is hardly a surprise given, for instance, 
the sharp decline in temp agency work.




St?phane D?o
Economic Research
UBS Warburg
Tel : +33 1 48 88 30 36
Fax : +33 1 47 63 48 08
Mob : +33 6 76 85 33 18
Stephane.deo@ubsw.com