Paris skyline, August 2015. Archive photo: Anthony Delanoix / Wikimedia Commons, CC0. Cropped.
France’s economy shrank in the third quarter while inflation accelerated in October, government figures showed Friday, as weaker exports and investment outweighed an improvement in household spending.
Gross domestic product fell 0.1% from the previous quarter, after no growth in the second quarter, according to the national statistics agency INSEE’s first estimate. Separate preliminary price figures put annual consumer inflation at 3.4% in October, up from 3.1% in September.
Exports and investment pull output lower
Exports fell 1.7% in the July-September period, reversing a 2.8% rise in the preceding quarter. Imports were almost unchanged, rising 0.1%. Net foreign trade subtracted 0.6 percentage points from GDP growth.
Transport-equipment exports dropped 9.1%, particularly in aerospace, while agricultural exports declined 7%. Manufacturing output fell 1.4%, with weakness across transport equipment, food production and other manufactured products.
Investment declined for another quarter, falling 0.6% after a 0.5% drop. Construction investment weakened again, while investment in manufactured products fell 1.9%.
Households offer some support
Household consumption rose 0.4%, twice the pace of the previous quarter. Public consumption increased 0.3%. Together, final domestic demand excluding inventories contributed 0.1 percentage points to growth.
Inventory changes added a further 0.4 percentage points, partly cushioning the drag from trade. Market services continued to expand, but total production of goods and services edged down 0.1%.
France has now recorded a first-quarter contraction of 0.2%, a flat second quarter and a third-quarter decline of 0.1%, based on INSEE’s latest figures. The intervening flat quarter means these are not two consecutive quarterly contractions.
Energy pushes inflation higher
Energy prices were 24.1% higher than a year earlier in October, compared with 21.3% in September. INSEE said energy inflation accelerated for a fourth consecutive month, led by gas and petroleum products.
Services inflation increased to 2.7% from 2.4%, with accommodation and transport contributing to the rise. Food-price inflation eased to 1.2% from 1.4%, while manufactured-goods prices remained slightly below their year-earlier level.
Consumer prices rose 0.4% over the month, reversing a 0.3% decline in September. The harmonised measure used for comparisons across European Union countries put annual inflation at 3.8%, up from 3.4%.
The combination of falling output and faster price increases shows pressure on both activity and purchasing power. The releases do not, by themselves, establish the causes of France’s broader economic problems or predict how policymakers will respond.
Both sets of figures remain subject to revision. INSEE plans to publish final October inflation figures on November 13 and detailed third-quarter national accounts on November 27.
JBizNews Global Markets Desk | Paris
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