Second estimate of French GDP growth affirms 0.5 pct rate, consumer spending likely to remain strong

The second estimate of French economic growth for the second quarter was released on Tuesday by the official statistical institute, INSEE. The headline growth rate affirmed the initial estimate of 0.5 percent quarter-on-quarter. However, the detail was slightly weaker. To two decimal places, the French economic growth was downwardly revised by 0.7 percentage point to 0.47 percent quarter-on-quarter.

Most notably, investment was not as solid as thought earlier. It grew 2.5 percent sequentially rather than the more-than 3 percent quarter-on-quarter in the initial estimate. Consumption was greatly unchanged, up 0.3 percent sequentially.

Meanwhile, households continued to give support at the beginning of the third quarter, with consumption expenditure on goods rising 0.7 percent sequentially in July to widely reverse the drop of similar magnitude in June and stand 2.1 percent higher on a year-on-year basis, which is the strongest annual pace in eight months.

Encouragingly, despite a deterioration in consumer sentiment last month, purchases of durables rose for the third successive month, accelerating 0.9 percent sequentially. This was mainly due to stronger spending on household items. And while some payback is expected in the near term, the positive trend in big-ticket spending is expected to be maintained towards the year-end, noted Daiwa Capital Market Research.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Euro was highly bullish at 110.043, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -23.7985. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest