Cedef Newsletter: The News of the Week
January 24, 2025
Main Points:
- Inflation continues to moderate, dropping to 4.9% in January
- Business activity remains strong, with the manufacturing sector leading the way
- The unemployment rate falls to 7.8%, the lowest level in over a decade
- The government announces new measures to support businesses and households
Inflation Update:
Inflation continues to moderate, with the consumer price index (CPI) rising by 4.9% in January. This is down from 5.1% in December and is the lowest rate since November 2021. The decline in inflation is largely due to moderating energy and food prices. However, inflation remains well above the Bank of France’s target of 2%.
Business Activity and Unemployment:
Business activity remains strong, with the manufacturing sector leading the way. The composite purchasing managers’ index (PMI), which measures the health of both the manufacturing and services sectors, rose to 55.2 in January, up from 54.9 in December. The increase in the PMI indicates that businesses are optimistic about the future and are increasing production and hiring.
The unemployment rate fell to 7.8% in January, the lowest level in over a decade. This represents a significant drop from the peak of 10.1% in April 2023. The decline in unemployment is due to the strong job growth in the manufacturing and services sectors.
Government Support Measures:
The government has announced several new measures to support businesses and households. These measures include:
- A tax credit for businesses that invest in new equipment
- A subsidy for businesses that hire young workers
- A reduction in energy taxes for households
- An increase in the minimum wage
These measures are designed to stimulate economic growth and help businesses and households cope with the rising cost of living.
Outlook:
The French economy is in a strong position and is well-positioned to weather the global economic slowdown. Inflation is moderating, business activity is strong, and unemployment is falling. However, the government needs to remain vigilant and continue to implement policies that support growth and address the rising cost of living.
La lettre du Cedef : l’actualité de la semaine
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