Bank of France estimates French third-quarter growth at 0.1%

what happened

Newsmetry API, citing the Bank of France, reports that the French economy expanded by 0.1% in the third quarter from the previous three months, when it stagnated. Services only just offset weakness in manufacturing, construction and agriculture. The central bank kept its estimate unchanged in its monthly outlook.

The bank’s survey of executives at 8,500 companies showed that industrial output continued to rise in September, but less than businesses had expected. Demand remained solid in aerospace and electrical equipment, which has benefited from data-centre construction. Construction activity barely increased as a rebound in structural work at sites delayed by this summer’s heatwaves offset thin order books, particularly for single-family homes.

Companies reported being squeezed by higher costs and weak sales. Industrial raw-material prices, especially for energy, fuel and metals, rose sharply in September, although firms passed only part of the increase on to customers. Cash positions worsened in both industry and services; restaurants cited weak demand, while professional-services firms reported longer payment delays. For October, businesses expect industrial output to accelerate, but car production is set to fall sharply because of temporary plant shutdowns tied to supply shortages. INSEE will publish its preliminary third-quarter GDP reading on October 30.

why it matters

The modest expansion and renewed rise in business uncertainty point to limited momentum in France. Markets will also focus on higher energy and raw-material costs, cautious household spending and the upcoming INSEE GDP estimate.

instruments