France: Weaker household spending drives slowdown in Q2
July 30, 2019
France’s economy grew a seasonally-adjusted 0.2% quarter-on-quarter in the second quarter, edging down from the 0.3% expansion recorded in the first quarter, according to a first estimate released by the French Statistical Institute (INSEE). The quarterly print undershot analysts’ expectations. However, on an annual basis, growth ticked up from the previous quarter (Q2: +1.3% year-on-year; Q1: +1.2% yoy).
Household spending surprised to the downside amid a fall in expenditure on engineered goods (Q2: +0.2% qoq s.a.; Q1: +0.3% qoq s.a.), while government spending gathered momentum (Q2: +0.4% qoq s.a.; Q1: +0.1% qoq s.a.). Household investment, meanwhile, nearly stagnated despite low interest rates, while business investment picked up. Consequently, overall fixed investment growth accelerated to 0.9% on a quarter-on-quarter, seasonally-adjusted basis (Q1: +0.5% qoq s.a.).
Export growth remained stable from the first quarter (Q2: +0.2% qoq s.a.; Q1: +0.2% qoq s.a.), despite the industrial pullback across the Eurozone. Import growth, meanwhile, slowed markedly (Q2: +0.1% qoq s.a.; Q1: +1.1% qoq s.a.). Taken together, the external sector made a neutral contribution to growth in the second quarter, after subtracting 0.3 percentage points in the first quarter.
Author: Nicolás J. Aguilar, Economist