The Banque de France expects “slight progress” in the economy in the 2nd quarter

The gross domestic product (GDP), which grew by 0,2% between January and March, "would still be driven this quarter by market services, thanks in particular to trade, business services and information-communication", indicated the monetary institution.

While activity was "very strong" in April, it nevertheless warned that its forecast for the period from April to June was "surrounded by greater uncertainty than usual" due to public holidays and bridges. of May.

A change in the basis used by the National Institute of Statistics (Insee) for its national accounts, which will be implemented on May 31, could also affect the calculation of quarterly growth.

“Catch-up”

For the whole of 2024, the Banque de France expects growth of 0,8%, more pessimistic than the government's forecast (1%).

In June it will publish its new medium-term macroeconomic forecasts, incorporating the budget cuts announced by the government to restore public finances.

The executive has already recorded 10 billion euros in savings in state spending and is seeking an additional 10 billion for 2024, in order to achieve its new public deficit objective (5,1% of GDP compared to 4,4 % previously hoped for).

In the month of April alone, activity progressed in services, industry and construction "thanks in particular to a catch-up after a slow month of March and in view of a slow month of May ", detailed the Banque de France in its monthly economic survey.

There was "very strong activity", with "within the three sectors, almost all sub-sectors (...) on the rise", declared Olivier Garnier, its general director in charge of statistics, studies and internationally, during a press briefing.

The rubber-plastic industrial sector and services to individuals (leisure, accommodation, catering, etc.), due to unfavorable weather, are an exception.

“Moderation” of prices

Due to calendar effects, activity would then remain flat in May in services - even if accommodation and catering would benefit from the holidays. It would fall back in industry and construction, according to the expectations of 8.500 business leaders or establishments surveyed between April 26 and May 6.

Concerning order books, they are still considered "degraded" in industry, except aeronautics. They remain “far behind” compared to the pre-Covid period in the structural work of buildings, strongly penalized by the sluggishness of the construction of new housing.

On the price front, the Banque de France signaled a continuation of "the moderation of sales prices" in a context marked by the decline in inflation which could, according to its governor François Villeroy de Galhau, lead the European Central Bank (ECB) to lower its rates on June 6.

Only 6% of companies in industry and 2% in construction increased their prices, a lower level than in the months of April before Covid-19. And 5% and 8% respectively have lowered them.

On the other hand, services have not yet returned to normal: 12% of companies in the sector have increased their prices, especially in advertising, market research and cleaning, and only 3% have lowered them.

Supply difficulties also improved significantly in April. They are “becoming rare” in construction (6%), according to the Banque de France, and in industry, they are only mentioned by 10% of companies. In the automobile and aeronautics industries, however, a quarter report this for certain components due to problems in the Red Sea.

In contrast, recruitment difficulties are only declining very slowly, with 38% of companies reporting this in April, compared to 39% in March.

Illustrative image of the article via Depositphotos.com.