France: GDP growth ticks up in Q3
France’s economy picked up steam in the third quarter, according to a comprehensive 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 was revised down to 1.4% (previously reported: +1.5% year-on-year; Q2: +1.6% yoy).
A recovery in household spending drove demand-side gains, expanding a revised 0.4% on a quarterly basis (previously reported: +0.5% qoq s.a.; Q2: -0.2% qoq s.a.) as an end to strikes led to higher expenditures on transport. Moreover, growth in government spending was roughly stable from a quarter earlier (Q3: +0.2% qoq s.a.; Q2: +0.3% qoq s.a.). Fixed-investment growth was also firm from the second quarter, expanding a revised 0.9% (previously reported: +0.8% qoq s.a.; Q2: +0.9% qoq s.a.) amid stronger corporate investment. Fixed-capital outlays by households slipped amid weaker housing starts, however.
External-sector dynamics improved slightly, with export growth clocking in at a revised 0.4% quarter-on-quarter (previously reported: +0.7% qoq s.a.; Q2: -0.1% qoq s.a.). On the other hand, imports slipped 0.3% (previously reported: +0.3% qoq s.a.; Q2: +0.5% qoq s.a.). Taken together, foreign trade’s contribution to headline growth was revised to 0.2 percentage points (previously reported: 0.1 percentage points) from a 0.2-percentage-point subtraction in the second quarter.
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 materialize. 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.”