French economy grows above expectations in Q3 2019

The French economy grew at the same pace in the third quarter as in the previous two quarters. On a quarter-on-quarter basis, the GDP in volume terms rose 0.3 percent in the third quarter, coming above consensus expectations of a growth of 0.2 percent. Household consumption expenditures accelerated a bit, while total gross fixed capital formation slowed down. In all, final domestic demand excluding inventory changes stayed dynamic and grew at the same rate as the previous quarter. Imports rebounded strongly and exports grew in the quarter. Overall, foreign trade was a drag on the headline print.

Production of goods and services slowed down a bit on a quarter-on-quarter basis, rising 0.3 percent after recording a growth of 0.4 percent in the prior quarter. Goods output dropped 0.4 percent after falling 0.2 percent in the prior quarter, whereas services output rose 0.5 percent after it grew 0.6 percent in the previous quarter. Manufactured goods output continued to fall in the third quarter, dropping 0.4 percent. Output dropped in all manufacturing sectors except for transport equipment.

Meanwhile, household consumption accelerated a bit in the September quarter, growing 0.3 percent. This is mainly driven by the consumption of goods that grew 0.4 percent after falling 0.1 percent in the prior quarter. However, consumption of services slowed down to 0.3 percent from 0.4 percent, owing to a deceleration in expenditure on accommodation and food services after a dynamic second quarter.

Expenditures on engineered goods rebounded, rising 1.6 percent, owing to an increase in vehicle registration. Energy expenditures dropped 0.3 percent. Corporate investment rose at the same pace of 1.2 percent in the third quarter, owing to expenditures in information-communication services and in transport equipment.

Imports grew strongly by 1.4 percent after falling 0.3 percent in the prior quarter, driven by the increase of car purchases and aircraft equipment. Exports rose 0.3 percent. Foreign trade negatively contributed 0.4 percentage points in the third quarter.