French Economic Rebound Suggests Best Year Under Hollande

  • Households, inventory recovery outweigh drag from trade
  • Euro-area expansion seen continuing as global demand cools

The French economy returned to growth in the third quarter, putting the country on track to deliver its strongest full-year performance since 2011.

Gross domestic product rose 0.3 percent in the three months through September after stalling in the previous quarter, national statistics office Insee said Friday. That matched the gain predicted by economists in a Bloomberg survey.

With low oil prices and monetary stimulus powering consumer spending and demand for services, the economy has advanced 1.1 percent in the first three quarters of the year, Insee said. Finance Minister Michel Sapin said accelerating corporate investment in the quarter bodes well for economic expansion next year.

“This morning’s figure confirms we have exited in 2015 the period of weak growth that France has known since the end of 2011,” Sapin said in a statement. “These put us under good conditions for accelerating growth in 2016.”

Domestic demand contributed 0.3 percent to growth in the quarter and inventory building contributed 0.7 percent, while external trade represented a 0.7 percent drag on growth. Corporate investment rose 0.7 percent after a 0.5 percent increase the previous quarter.

France’s gross domestic product estimate will be followed by Germany at 8 a.m. local time and then countries including Italy and Portugal later. The series of releases will culminate at 11 a.m. when Luxembourg-based Eurostat publishes figures for the 19-nation region. They are forecast to show 0.4 percent growth in the quarter, matching the pace of the April-June period.

European Central Bank President Mario Draghi offered a downbeat assessment of the outlook for the region on Thursday, saying that “downside risks stemming from global growth and trade are clearly visible.”

In France, manufacturing output stagnated in September and only increased 0.1 percent in the third quarter. Building materials company Cie. de Saint-Gobain SA cut its full-year profit outlook late last month, citing in part weak demand in France.

“French data has been mixed at best,” Matthew Beesley, head of global equities at Henderson Global Investors, said on Bloomberg Television this week. “We’ve had some pretty disappointing data out of France over the last four or five months.”

A projected 1.1 percent full-year expansion for 2015 follows three calendar years in which growth was between 0.2 percent and 0.7 percent, making this the strongest economic performance since French President Francois Hollande took power in May 2012. In 2011, Nicolas Sarkozy’s last full year in power, the economy grew 2.1 percent.

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