Household purchasing power and the French savings rate are on the rise again, while consumption continues to decline.
For now, the French economy is holding up. According to the final results published by INSEE, activity in France increased by 0.2% in the third quarter. A decent performance, even if growth is marking time after a rise of 0.5% in the spring.
According to the Statistical Institute, which confirms its first growth estimate dating from a month ago, this slowdown is mainly due to a decline in household consumption (-0.1% after +0.4% in the quarter previous). Due to the war in Ukraine, the contribution of foreign trade remains negative (-0.5%, after -0.2% in the previous months), with imports increasing more strongly than exports.
“The French economy resists”
Due to the public aid put in place to fight inflation – in particular the revaluation of social benefits in July -, household purchasing power has however rebounded significantly, with an acceleration in gross disposable income (+2.6% , after 1.1% in the previous quarter). But because of the risk of recession next year, the French savings rate has started to rise again, to now stand at 16.6%.
Read alsoGrowth slows, businesses suffer
On the side of Bercy, we see the glass half full. “The French economy resists”do we welcome in the entourage of Bruno Le Maire, for whom “corporate investment continues to accelerate, production in the manufacturing industry maintains its momentum, purchasing power rebounds strongly thanks to support measures and job creation, and the aggregate margin rate remains at a level comparable to the pre-crisis”.
Sharp drop in consumption in October
But the satisfaction may be short-lived. And for good reason: consumption, the traditional engine of growth, continues to decline with a 2.8% slide in October compared to September, its biggest fall in 18 months. Over one year, from October 2021 to October 2022, the fall reached 5.9%. The decline in consumption is mainly explained by the decline (-7.9% over one month) in energy expenditure, due in part to the exceptionally mild climate at the start of the school year and the drop in fuel prices at the pump.
Read alsoEnergy: Bruno Le Maire tries to reassure SMEs and traders
It is also due to declines in purchases of manufactured goods (-1.7% over one month), especially new telephones and vehicles, clothing (-4.1%) and food expenditure (-1.4% ). “This shows that the economic situation is not the most favorable. Now is not the time to make big purchases”explains Charlotte de Montpellier, economist at ING.
SEE ALSO – United Kingdom “in recession”: both GDP and inflation are expected to fall in 2023