France's PM says the government is fighting unemployment

Unemployment dipped to 2,712,000 from 2,718,000 in July on a seasonally adjusted basis, official figures show.

That left France's jobless rate unchanged at 9.9% in August, the government said.

France's national statistics office confirmed that the economy grew by just 0.1% during the second quarter, from 0.4% in the first three months of 2005.

The gross domestic product (GDP) data was the worst since the third quarter of 2004.

Villepin praise

The static seasonally adjusted jobless figures were largely expected by economists.

Weak demand from French consumers is hitting the economy

France's government has pledged to bring down high unemployment levels which, until recently, stood at more than 10%.

Speaking before the release of the latest jobless figures, French Prime Minister Dominique de Villepin praised the efforts his government had made to tackle unemployment.

"Things are improving," Mr Villepin said on Thursday.

Over the summer, Mr Villepin announced controversial changes in employment protection laws in a drive to tackle joblessness.

Separate figures showed that claimant count unemployment dropped by 21,500 to 2.4 million in August. The 0.9% drop was the fifth consecutive month that this register of job seekers had shown a fall.

'Rather surprising'

Meanwhile, French consumer confidence showed some signs of improvement, rising to its highest level since May.

The government statistical office's consumer morale index registered minus 29 in September, up from minus 30 in July. Figures for August were unavailable.

Nicolas Claquin, an economist with CCF bank, described France's improving consumer confidence as "rather surprising".

"You would have thought that the recently high oil prices would weigh on consumer morale, but that does not seem to be the case. That's encouraging," he told Reuters news agency.

On Wednesday, the French government unveiled a draft budget for 2006, which it said would bring the country's bulging deficit within strict European Union limits.