France: GDP growth ticks up in Q3
France’s economy picked up steam in the third quarter, according to a first estimate released by the Statistical Institute (INSEE). On a seasonally-adjusted basis, growth ticked up to 0.4% quarter-on-quarter (Q2: +0.2% quarter-on-quarter s.a.), roughly in-line with analysts’ estimates. In annual terms, growth slowed to 1.5% (Q2: +1.7% year-on-year).
A recovery in household spending drove demand-side gains, expanding 0.5% on a quarterly basis (Q2: -0.1% qoq s.a.) as a return to normal temperatures and an end to strikes led to higher expenditures on energy and transport, respectively. Moreover, government spending grew stably from a quarter earlier (Q3: +0.2% qoq s.a.; Q2: +0.2% qoq s.a.). Meanwhile, rosy fixed-investment growth (Q3: +0.8% qoq s.a.; Q2: +0.9% qoq s.a.) was sustained by corporate investment—in the services sectors, in particular. Fixed-capital outlays by households slipped amid weaker housing starts, however.
External-sector dynamics improved significantly, with export growth clocking in at 0.7% quarter on quarter (Q2: +0.1% qoq s.a.). On the other hand, import growth slowed to 0.3% (Q2: +0.7% qoq s.a.). Taken together, foreign trade’s contribution to headline growth rebounded to 0.1 percentage points (Q2: minus 0.2 percentage points).
Commenting on the third-quarter reading, Julien Manceaux, senior economist at ING, noted:
“The [Q3] GDP figures showed that a rebound in demand, following a weak first half of the year, will not materialise. With 0.4% quarter-on-quarter growth, the government’s 1.7% growth projection for 2018—which once looked pessimistic—will now probably be missed. […] All in all, 2018 growth should reach 1.6%, but don’t be fooled: this is largely a 2017 story. The growth dynamic of 2018 is much closer to potential than what was hoped six months ago when [2.0%] still looked achievable.”