France’s unemployment rate dropped below nine per cent for the first time since 2009, adding weight to efforts by President Emmanuel Macron to liberalise a rigid labour market that remains hamstrung by a skills mismatch.

The rate fell to 8.9 per cent in the fourth quarter of last year from 9.6 per cent in the previous three months, national statistics office INSEE said last week.

That drop was the steepest since the 2008 financial crisis, suggesting a clear break below the levels of around 10 per cent of the last few years as an economic recovery in the eurozone gathers pace.

Around four months after, as his first major policy initiative as president, Macron changed labour rules to gave firms increased flexibility to hire and fire staff, the French economy is creating jobs at its fastest rate since 2007, INSEE said last week.

Whether unemployment can fall much further without additional reforms is far from certain, however.

“I think it’s too soon to say that Macron’s reforms are having a positive impact, but it’s clear that stronger activity and a more positive business environment are boosting employment,” Economist Diego Iscaro of IHS Markit said.

Surveys have showed business morale surging to multi-year highs since Macron was elected.

His government had come under pressure in recent weeks after several companies, including retailer Carrefour, announced sweeping job cuts.

But new jobs are being created at a faster rate, and US online retail giant Amazon said last week it would add 2,000 permanent contract positions this year.

Macron’s government also plans to invest €15 billion in job training over the next five years, significantly expanding apprenticeship schemes under broader changes to be presented in April.

That reform will take time to kick in, leaving companies to grapple in the meantime with a widespread mismatch between those seeking work and the jobs on offer. Even though French unemployment remains higher than the eurozone average, a lack of skilled workers is creating production bottlenecks and snarling up supply chains, company executives told Reuters last week.

That means the country may already be reaching the limits of what economists call its structural unemployment rate, which could be around nine per cent according to European Commission data from November.