French economic growth picked up by less than expected in third quarter despite a rebound in consumer spending, official data showed on Tuesday.
The slow growth is putting pressure on the government’s full year growth forecast, reports Reuters.
The euro zone’s second-biggest economy grew 0.4 per cent in the third quarter, up from 0.2 per cent in the previous three months, the INSEE statistics agency said in a first estimate for the period.
“Today’s outturn marks the return of where French GDP growth should be at this stage of the business cycle – above potential, absorbing slack – and with it, should mark the end of material underperformance against the euro area,” Barclays economist Francois Cabau said in a research note.
However, the reading fell short of an average estimate for 0.5 per cent growth in a Reuters poll of 31 private sector economists, as well as INSEE’s own 0.5 per cent forecast.
Economists said the reading meant the economy would need to grow by about 0.8 per cent in the last quarter to attain the 1.7 per cent rate the government is forecasting for the full year.
Morgan Stanley economist Matthew Pennil said fourth quarter growth was likely to be closer to 0.4 per cent judging by recent business confidence surveys and despite a cut in workers’ welfare contributions this month.
“Volatility in quarterly growth this year has largely been driven by tax policy,” Pennil said.
“Measures that lowered household incomes early this year are only now being offset by reductions in social contributions, which are fuelling a recovery in consumer spending.”
Household spending grew 0.5 per cent in the third quarter after falling 0.1 per cent in the previous three months, when strikes hit spending on transport in particular.