August 17, 2017 / 9:10 AM / 2 years ago

UPDATE 1-French second-quarter jobless rate dips to lowest in 5 years

* Q2 jobless rate 9.5 pct vs 9.6 pct in Q1

* France set for strongest growth since 2011 -INSEE

* Macron planning job market reforms

* French unemployment still above Germany, UK (Adds fund manager comments and detail)

By Sudip Kar-Gupta

PARIS, Aug 17 (Reuters) - France’s unemployment rate fell to its lowest level in five years during the second quarter, boosting President Emmanuel Macron as he pushes through reforms to ease employment regulations.

The jobless rate dipped to 9.5 percent from 9.6 percent in the previous quarter, the INSEE national statistics office said on Thursday.

The unemployment numbers chimed with INSEE data last week that showed French private sector job growth accelerating at its fastest rate in at least six years during the second quarter.

Lorne Baring, managing director of Geneva-based investment company B Capital, said the unemployment data reaffirmed that France, the euro zone’s second largest economy, was part of a wider recovery in the bloc.

“France, which has seen a pick up in activity this year, is turning around after having previously diverged from Germany’s lead,” said Baring.

The 9.5 percent reading was the first time the jobless rate had fallen to that level since the first quarter of 2012.

France is on course for its strongest economic growth since 2011 this year as foreign trade proves less of a drag and the unemployment rate falls, INSEE has forecast, with the country’s 2017 economic growth estimated at 1.6 percent.

“The private sector economy is progressing well and we should continue to have good jobs data. Demand is good,” said Bruno Fine, president of investment firm Roche Brune Asset Management.

The steady creation of new jobs is gradually healing France’s labour market, which suffered huge job losses after the 2008 global financial crisis.

Nonetheless, it remains substantially higher than European peers such as Germany - where unemployment stands at just under six percent - and Britain, where the rate is 4.4 percent, the lowest since 1975.

The French government plans in September to push through reforms that will ease rules on the hiring and firing of staff and hand companies more power to define working conditions that are currently set at sector level.

With parliament’s backing, the government will hold negotiations with trade unions and business leaders before driving the reforms through by decree.

One trade union, the hard-left CGT, has promised nationwide protests while two others are reserving judgement until they see the final bill.

The government targets cutting unemployment to 7 percent in the next five years.

The jobless rate figures published by INSEE corresponded to standards set by the International Labour Organisation (ILO) to measure the percentage of people who are unemployed.

For more details from INSEE: here (Reporting by Sudip Kar-Gupta; Editing by Richard Lough and Matthew Mpoke Bigg)

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