No Growth Relay Today in the French Economy, No Engine: French Growth Expected at 0.1% in Q3

After a first half of near-recession, INSEE revealed French growth for the third quarter on Friday, which economists see stagnating or progressing very slightly, mirroring gloomy data since the summer. Like the Bank of France, the National Institute of Statistics (Insee) anticipates growth in gross domestic product of 0.1% from July to September, after an unexpected decline of 0.2% in the first quarter and stagnation in the second. “Relative to the good performance of its neighbors, the French economy is stalling,” noted INSEE in September in its quarterly economic report entitled “Orange vigilance on growth”.

This summer, household consumption, which is the traditional engine of growth in France, remained lackluster. It increased by 0.4% in July, mainly driven by energy expenditure linked to the heatwave, before falling by 0.5% in August. The September figure will be published on Friday.

Industrial production fell in July and August. And if manufacturing production increased slightly in August, it is "too modest a rebound to announce a recovery", according to ING economist Charlotte de Montpellier. The industry "is stalling" She sees in these figures an "accumulation of signals" going in the direction of "a new stagnation in the third quarter", anticipating annual growth of at best 0.3% against 0.5% for the government, and 0.4% for INSEE and the Banque de France.

The Rexecode institute anticipates 0.1% growth in the third quarter, according to its economist Anthony Morlet-Lavidalie. He also notes that the industry, “which did well” at the start of the year, “is stalling”. As for services, they should show moderate growth, he says.

According to him, business investment probably "suffered" this summer with the rise in interest rates. Household investment should have remained "suffering" and that of local authorities should have suffered the impact of expenses incurred before the municipal elections. And "we won't find much in terms of household consumption" to support summer growth, he confirms.

As for foreign trade, “customs data is not particularly good”. In short, "there are no growth drivers today in the French economy, no engine", apart from "a few pockets such as aeronautics or data centers", believes Mr. Morlet-Lavidalie.

“Not far from the peak” of prices All against a backdrop of rising prices, due to the soaring prices of fuel. Inflation was thus 3% year-on-year in September, further dampening consumption. October inflation will also be released on Friday, as will third-quarter GDP for several other eurozone countries, including Germany.

For Anthony Morlet-Lavidalie, however, "we are not far from the peak, or even the peak" of prices currently. Especially since "in a context of depressed activity", manufacturers will have difficulty increasing their selling prices. The fourth quarter doesn't look much better for growth.

Machine-translated from French