France Resists Recession With Meager Growth, Central Bank Says
(Bloomberg) -- France's economy has slowed to a meager rate of expansion after a bumper performance earlier this year, a Bank of France survey showed.
Output rose 0.1% in the three months through September, compared with 0.5% growth in the second quarter, according to the central bank's assessment of high frequency data and its monthly survey of 8,500 firms.
“The economy after the summer is less favorable than before the summer,” Bank of France Chief Economist Olivier Garnier said. “However, we are not in such a bad situation as PMI indicators show and not at all in a recession situation.”
Business leaders expect activity to advance in industry and services in October and stabilize in construction.
The euro area's second-largest economy is benefiting from a stabilization of supply difficulties at low levels and a decline in raw material costs. The share of companies raising prices is low and close to pre-Covid levels.
The easing of those pressures has helped France show greater resilience than Germany to weaker demand from China and the reverberations of last winter's energy crisis. Economists expect the French economy to grow 0.8% this year, while Germany's is forecast to contract 0.4%.
Cautious Notes
Still, the Bank of France's survey also included some notes of caution, with business leaders in industry revising down their assessments of cash positions and order books.
“We don't see any signs of an acceleration to come when we look at order books,” Garnier said.
The central bank also said production capacity utilization in industry declined to 76% in September from 80% in August. In services, activity only advanced slightly in September, supported in part by good weather and non-recurring events including the Rugby World Cup, the Bank of France said.
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