France: economic indicators quarterly changes
The gradual deterioration in the business climate suggests a slowdown in French growth, which may even have fallen into negative territory in the 4th quarter, a contraction which would be consistent with the decline in the balance of opinions about production in the economic survey in industry.
Consumer confidence has remained at a relatively low level for around 6 months. It has not improved, despite a significant upturn in purchasing power (+1% q/q in the 3rd quarter, and an estimate of +1.1% q/q in the 4th quarter). This suggests an increase in the savings rate and therefore a drop in spending.
Inflation has been fluctuating for almost 6 months around 6% year-on-year. In December, it fell to 5.9% y/y compared with 6.2% in November (in the context of the fall in energy prices). Energy prices are expected to increase from January (end of the rebate on fuel, increase in the regulated price of gas, then electricity): according to our forecasts, inflation is expected to reach 6.5% in February.
At this point the deterioration in the business climate has not affected the labour market, which continues to be dominated by recruitment difficulties which in turn support employment. Furthermore, wages are gradually increasing, and these increases are expected to strengthen further in 2023 (+5%, after +3.4% as an annual average in 2022 according to our forecasts).
In relation to the 4th quarter, our forecast anticipates negative growth (-0.2% q/q), underpinned by the fall in energy consumption (and the stagnation in other items) as well as in industrial production (after a good 3rd quarter). However, in the latest indicators (business climate, exports) we see somewhat positive surprises in November (after much more negative indicators in October), elements which are reflected by our growth proxy (nowcast), which would suggest a more modest fall (-0.1% q/q).
GDP growth q/q: actual, carry-over and forecasts
Stéphane Colliac
