PARIS (Reuters) - French business morale climbed above its long-term average for the first time since August 2011, data from state statistics body INSEE showed on Thursday, suggesting a recovery in the euro zone's second-largest economy continued at the start of the fourth quarter.
Although morale in the industrial sector edged down to 103 in October from 104 in September, in line with expectations and still above its long-term average, INSEE's wider business sentiment index inched up to 101, the highest in four years, after two consecutive months at 100.
The increase was supported by a better business climate in the services sector, which jumped to 100 in October from 97 the month before, and a slight increase in the retail sector to 110.
However, morale in the construction sector, which has been the main drag on the French economy in the past few years, dropped by one point to 90.
"It is interesting to note that business surveys in sectors other than manufacturing and construction have picked up nicely," Tullia Bucco, an economist with UniCredit, said.
"This suggests that, while the manufacturing sector is under pressure, sectors more sensitive to improving domestic demand are gathering traction."
After an unexpected second-quarter dip to zero growth in GDP and consumer expenditure, INSEE said earlier this month it was expecting quarterly GDP rises of 0.2 and 0.4 percent respectively in the third and fourth quarters.
These surveys "show that the recovery is spreading," Finance Minister Michel Sapin said in a statement. "This supports the prediction of 1 percent growth in 2015," he said.
For business morale details from INSEE: http://link.reuters.com/pav79t
For industry morale details from INSEE: http://link.reuters.com/raw62v
For a graphic: http://link.reuters.com/nut32t