French industrial companies have cut their investment outlook for 2008 but still expect investment to rise by 6 percent against a previous forecast of 8 percent, a survey from statistics office INSEE showed on Thursday.

Industry executives in the euro zone’s second biggest economy expected manufacturing investment would also rise by 6 percent this year, compared with 8 percent in a previous forecast conducted three months earlier, INSEE said in its July survey of company heads.

Thursday’s survey comes amid growing signs of a slowdown in French economic growth for 2008, following a 0.3 percent contraction in gross domestic product in the second quarter.

With the focus increasingly on the possibility of a recession in the third quarter, the survey, which does not cover the energy sector, provided some comfort to the government in that industry investment projects were still positive overall.

But the results also suggested a mixed picture for the economy, in which industrial investment makes up 30 percent of productive investment.

The survey showed the capital goods sector should see the strongest level of investment, forecasting a 13 percent rise, down from 17 percent in the last survey but suggesting France’s big manufacturers were still in relatively strong shape.

By contrast, consumer goods manufacturers cut their outlook to a 2 percent rise from 5 percent previously while the auto sector continues to see its investment declining by 1 percent.

“More than uncertainty in the automobile sector, this reflects a strategic change by French manufacturers,” said Alexandre Mirlicourtois, an analyst at Paris-based consultancy Xerfi in a note.

“In future, they will be setting up their new assembly units outside our borders.”

Small companies were also more uncertain about the outlook, with firms employing fewer than 100 staff cutting their investment forecasts from a 9 percent rise to 5 percent. Companies with more than 500 staff cut their forecasts to a 5 percent rise from 6 percent.

The government has not so far revised its forecast of growth in a range of 1.7-2.0 percent but Economy Minister Christine Lagarde has indicated that it may do so next month when the 2009 budget is prepared.

Source: http://www.afxnews.com

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