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French Q1 growth confirmed at 0.6%, corporate margins rise

[PARIS] A pick-up in corporate profit margins and strong household spending boosted French growth in the first quarter, confirming the eurozone's second-largest economy has begun to recover.

Gross domestic product rose by 0.6 percent in the first quarter, in line with a preliminary estimate, data from statistics office INSEE showed on Wednesday. That was twice the rate seen in Germany and in Britain in the first three months. "INSEE confirmed the good growth figures of the first quarter, which show a recovery is underway and bolsters the government's 1 per cent growth target for this year," Finance Minister Michel Sapin said in a statement.

Corporate profit margins rose to 31.1 per cent, the highest since the first quarter of 2011, thanks to a cut in payroll tax the government is gradually phasing in. "The new margins must allow businesses to invest and hire," Mr Sapin said.

Corporate profit margins for French companies were the worst in the euro zone in 2012, and the government had pinned its recovery hopes on expectations that businesses would resume investing.

The lower euro did not seem to translate into a better trade balance for France, however, with exports rising less fast than imports in the three months to March 31.

Business surveys published on Tuesday showed the recovery was likely to continue in the second quarter. The French economy eked out only 0.2 per cent growth last year.