According to RICS Global Real Estate Weekly, the French economy is expected to recover gradually. However, it stated that this may not immediately spur housing demand.

“In May, the headline business climate indicator crept up to 93, the highest reading since April 2009, but it remains at depressed levels (the long run average since 1975 is 100). Beneath the headline indicator, the survey is still showing that activity and employment continue to contract (albeit at a slower rate than 12 months ago) whilst capacity utilisation rates within the sector remain relatively depressed (85.7% compared to the long run average of 88.5%),” stated the report.

It continued,“ A broadly similar picture is evident across the Euro area; the European Commission’s (EC) monthly builders’ survey shows that confidence has improved slightly, but it remains negative and, crucially activity continues to fall while employment expectations remain very downbeat. However, some countries within the Euro area have experienced a much sharper turnaround in recent months that others. This is particularly the case for the Scandinavian countries covered in the EC survey, Sweden and Finland. In both countries, building activity is now increasing while employment expectations have turned positive. That said, the turnaround has been relatively more pronounced in Sweden but this is not altogether surprising considering the vigorous recovery in the economy that has taken place since Q2 2009 (the economy grew by 1.4% during Q1 2010 alone).”

RICS expects that confidence will continue to recover on the back of stronger economic activity. “However, the low level of capacity utilisation is likely to hinder the jobs outlook within the sector during the course of the year. Forward looking indicators of economic activity suggest a robust pace of growth during Q2 and that the base of the recovery appears to broadening beyond manufacturing to the service sector. Indeed, the May PMI readings were 61.4 in the service sector (the highest since April 2006) and 55.8 in the manufacturing sector (a three month low). However, it is still early days and this stronger economic activity, as indicated by the business surveys, has yet to feed through to the official labour market data; unemployment continued to increase in April, reaching 2.941m (or 10.1%). In this environment, it will still take time for demand, particularly for housing, to recover,” stated the report.