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(Bloomberg) — French business confidence remained weak in May, adding to evidence that fallout from the Iran war is weighing on demand in the euro area’s second-largest economy.
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Statistics agency Insee’s monthly gauge was unchanged at 94, six points below the long-term average, as declines in services and retail offset stronger-than-expected confidence in industry.
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In manufacturing, which is showing more resilience than consumer-focused sectors, the indicator rose two points to 102.
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On the eve of Friday’s indicators, S&P Global’s Composite Purchasing Managers’ Index revealed the steepest plunge in business activity in more than five years. That’s on top of data showing output stagnated at the start of 2026 as consumers pared back spending and investment, while unemployment also hit its highest level in half a decade.
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The employment indicator in Insee’s confidence survey showed signs of a domestic slowdown, as it declined three points to 92, the lowest level since the Covid pandemic.
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In an attempt to mitigate rising costs from surging energy prices, the government unveiled extra measures for the most affected companies and workers on Thursday. But the aid is limited and targeted, compared to vast government outlays in 2022, as France struggles to rein in its bloated deficit.
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French Finance Minister Roland Lescure said on Friday the government still forecasts economic expansion of 0.9% this year, even as he acknowledged uncertainty around that scenario. He also reiterated the government will make adjustments to spending if needed to ensure it meets the 2026 target of reducing the deficit to 5% of economic output.
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“Obviously, this crisis changes every day, and we are following it closely and will adapt accordingly,” Lescure said on Sud Radio. “I don’t want to be a doom-sayer or a happiness salesman; the reality is weaker-than-expected growth. But it’s still growth.”
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(Adds details on manufacturing in third paragraph, government measures and minister comments from sixth paragraph)
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