July 29, 2016 / 5:30 AM / a year ago

French Q2 growth unexpectedly grinds to a halt on weak consumer spending

PARIS, July 29 (Reuters) - French economic growth stalled
unexpectedly in the second quarter from the previous three
months on weak consumer spending and a drop in business
investment, the INSEE national statistics agency said on Friday.
    A Reuters poll of 34 analysts had on average forecast growth
of 0.2 percent, down from a revised 0.7 percent in the first
three months of the year. The lowest estimate in the poll was
for 0.1 percent.
    Traditionally the main driver of French growth, consumer
spending showed no growth at all in the quarter, which was
marred by floods, strikes and violent street protests over a
contested labour law.
    Meanwhile, business investment fell 0.2 percent from the
previous quarter, when many companies had rushed to take
advantage of a tax write-off on some investments before its
expiration. It was later extended for a year.
    While domestic demand was flat, foreign trade added 0.3
percentage points to growth as imports fell more than exports,
INSEE said. 
    French Finance Minister Michel Sapin said in a statement
that the figures were "disappointing", and reflected the
exceptionally strong growth in the previous quarter and
exceptional factors like strikes in refineres.
    He said the government was nonetheless sticking with its
2016 growth forecast of 1.5 percent.
    
    MAIN FIGURES
    
                                             QUARTERS        
                                   Q3      Q4      Q1      Q2
 Total GDP                        0.4     0.4     0.7     0.0
 Imports                          1.6     2.6     0.5    -1.3
 Household consumption            0.5     0.0     1.2     0.0
 Public consumption               0.3     0.5     0.4     0.4
 Investment                       0.6     1.1     1.3    -0.4
  - Business investment           0.4     1.5     2.1    -0.2
  - Household investment         -0.2     0.0     0.2    -0.1
  - Public investment             2.6     1.5     0.1    -1.7
 Exports                         -0.2     0.8    -0.3    -0.3
                                                             
 Contributions to growth:                                    
 Domestic demand exstocks         0.5     0.4     1.0     0.0
 Stocks variations                0.5     0.6    -0.1    -0.4
 Trade balance                   -0.6    -0.6    -0.2     0.3
   
    For a graphic of GDP by contributions: link.reuters.com/pyx28s
    For further details from INSEE: here

 (Reporting by Leigh Thomas; Editing by Andrew Callus)

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