After zero growth in three out of the last five quarters (between Q4 2022 and Q4 2023), we are expecting moderate growth in Q1, at 0.1% q/q (although our nowcast and the INSEE forecast suggest a slightly higher figure of +0.2%).
The last time growth was significant (in Q2 2023, with +0.6% q/q), this was explained by significant restocking (contribution of 0.5 points, after a contribution of -0.4 points in the previous quarter). A similar restocking trend could occur in Q1 2024, following a negative contribution of inventories in Q4 2023 (-0.7 points). However, this very negative figure suggests that demand in Q1 is particularly subdued, and is not expected to contribute to growth (if growth were to prove positive).
Several indicators suggest that any recovery in growth should remain moderate and gradual. Corporate investment is expected to continue its decline first seen in Q4 2023 (-0.9% q/q and stable y/y for the first time since the end of 2020). Order books in the B-to-B sectors suggest a continuation of this deterioration (balance of opinion of -18 on average over the last six months versus -8 over the previous six months, according to the INSEE Manufacturing Survey, calculated, as an average, on machinery and equipment, electrical equipment and electronics). In the automotive sector, the balance of opinion on order books fell sharply to -30 in February compared to -7 on average over the previous six months.
Households saw an increase in their purchasing power in Q4 (+0.6% q/q, per unit of consumption), but their consumption stagnated. It seems they have barely perceived the recent disinflation. The household survey confidence index stood at 89 in February compared to 88 in November, and the balance of opinion on past prices was 54 in February 2024 compared to 56 in November 2023, even though inflation (harmonised index) fell to 3.1% y/y in February (compared to 3.4% in January and 4.6% in October, last figures known before the November and February surveys).
At the same time, the situation on the labour market has not deteriorated significantly. The Employment Barometer has fallen (it was still at 105 in September 2023) but it remained close to its historical average at 101 in February 2024, while the unemployment rate only recorded a slight upturn (at 7.5% in Q4) compared to its low of 7.1% in Q1 2023.
Article completed on 29/02/2024
