French growth to suffer "backlash" from Olympics in fourth quarter

Activity should record a "slightly positive progression" between October and December, but this increase would be offset by the "backlash" caused by the end of the Olympic Games, "estimated at -0,2 points of GDP", the institution specified in its monthly economic survey, without quantifying the level of growth expected in the fourth quarter.

The Olympic Games had fuelled growth in the third quarter (+0,4%), benefiting the services sector. The activity had notably benefited from ticket sales and sales of audiovisual broadcasting rights.

For the whole of 2024, the Banque de France anticipates growth of 1,1%, as do the government and the National Institute of Statistics (Insee), which expects zero growth in the last quarter.

"Instability"

According to the business survey conducted among around 8.500 companies questioned between October 29 and November 6, activity increased in October in industry, supported by aeronautics and the food industry.

On the other hand, the automobile sector continued to suffer, especially "the production of electric cars, which are suffering from Chinese competition and a drop in demand for these models", the Banque de France stressed.

Industrial order books are still considered "empty", except in aeronautics.

In commercial services, activity slowed down while in construction, structural work benefited from the resumption of projects that had been postponed by the Olympic Games.

In November, the Banque de France estimated that activity should change "little" in industry and services, and that it would decline in construction.

She notes that the monthly uncertainty indicator, based on business comments, remains "relatively high across all sectors." "Business leaders cite uncertainty over domestic economic and fiscal policy, and the unstable geopolitical situation (especially ahead of the U.S. elections), which tend to put investment plans on hold," she said.

Thus, in services, temporary work has declined for the second consecutive month, "in particular for reasons of wait-and-see attitude attributed to the context of uncertainty". In construction, customers are waiting to see how the "MaPrimeRénov'" scheme will evolve as part of the discussions on the budget for 2025.

Standardized prices

As part of the 60 billion euro budgetary effort that it plans for 2025 to redress the ailing public finances, the government wants to reduce the subsidies for this public aid for the energy renovation of housing, to 2,3 billion euros compared to 4 billion announced for 2024.

The National Assembly rejected on Tuesday at first reading the text largely rewritten by the left within the hemicycle. The text will now continue its legislative journey in the Senate.

The lack of visibility mentioned by companies is part of an economic environment that is expected to be tense in November and December in France, with social plans in particular at Michelin and Auchan, and a series of calls for strikes.

Industry Minister Marc Ferracci warned on Saturday that we would "probably" have to expect further announcements of site closures "in the coming weeks and months".

According to the general secretary of the CGT, Sophie Binet, in industry alone, "we are at the beginning of a violent industrial bloodletting", with the estimated disappearance of "more than 150.000 jobs" or even more.

Regarding sales prices, the situation normalized in October, including in services, returning to pre-Covid levels. "Inflation should therefore remain under control," according to the French central bank.

Recruitment difficulties continued to decline, with 31% of companies saying they were experiencing them in October compared to 35% in September, and supply chain difficulties remained stable (10%). However, the latter are higher in the aeronautics (37%) and automotive (16%) sectors.

Illustrative image of the article via Depositphotos.com.