France trims Q1 growth forecast to 0.4%

Analysis

The French economy is expected to grow by 0.4% in the Q1, the Bank of France said on Friday, trimming its previous forecast of 0.5%.

In its monthly survey of businesses in the euro zone’s second biggest economy, the central bank said its business sentiment indicator rose to 107 in February from 106 in January and the outlook for industrial activity was healthy. “The flow of new orders slowed, mainly on the domestic market. Order books were deemed to be a little down, but they remained at a high level, above normal,” it said in a statement.

“The outlook for (industrial) activity over the coming months remains on an upward path across all sectors.” It said retail activity dipped again in February, although it posted a marked increase compared with a year ago. That was in line with recent reports from the national  statistics office INSEE and anecdotal evidence showing that households might be cutting back on purchases of some non-essential items as they faced rising food and petrol prices. French consumer spending suffered its sharpest monthly drop in more than a year in January, and market analysts say spending may struggle to rebound given that consumers’ confidence fell to its lowest in more than two decades in February.

Retailer Carrefour said earlier in March slumping consumer confidence was beginning to affect non-food sales. “In France we have very good trends in food,” Carrefour CEO Jose Luis Duran said on March 6. “Probably the only weak point is the behaviour in terms of non-food.” (Reuters)

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