France's central bank, Banque de France (BdF), said on Friday the country's economy is expected to shrink slightly in the last quarter this year.
In its monthly economic report, the bank estimated a 0.1-percent contraction in the last three months of 2012 after confirming third quarter growth sliding on unfavorable business climate in a previous statement.
In October, the industrial activity witnessed a slight decrease due to persistent decline in the automotive business with the capacity utilisation rate stabilised at 76.2 percent but remained below its long-term average.
In short term, the bank forecasted a slight drop in French industrial activity.
"Activity in the services sector fell very slightly in October, with the decline in the temporary work and consumer services sectors almost offset by the improvement in the engineering and information and communication sectors," the bank said.
Indicators of industry and services were unchanged at 92 points and 91 points respectively.
In a recent interview, Finance Minister Pierre Moscovici estimated "a slightly positive growth" in the third quarter and kept unchanged the government's forecast of 0.3 percent of growth for the whole year of 2012.
However, ailing economic activities and record high joblessness could increase the risks of falling through financial targets that would force the Socialists to make more savings in a context of climbing public discontent.