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French consumers boost economic growth

city view shows the French flag above the skyline of the French capital as the Eiffel Tower and roof tops are seen in Paris
city view shows the French flag above the skyline of the French capital as the Eiffel Tower and roof tops are seen in Paris Reuters/Benoit Tessier

French growth accelerated more than expected at the start of the year, as the strongest increase in consumer spending since 2004 and a pick-up in business investment offset a drop in exports. 

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The French economy grew 0.5 percent in the first quarter, beating even the most optimistic forecast as consumers splurged on clothes, cars and housing equipment, the INSEE national statistics agency said in a preliminary estimate on Friday.

Consumer spending rose 1.2 percent over the three months, outweighing a weaker contribution from trade and business inventories.

In a preliminary reading of gross domestic product for the quarter, INSEE said the 2 trillion euro economy had accelerated from the 0.3 percent growth posted in the previous three months, with a 1.6 percent increase in corporate investment offering hope the stronger growth could be sustained.

The stronger French performance also contrasted with a slowdown in the United States and Britain, which both reported lower growth earlier this week.

Reaching that target is important for unpopular Hollande and his 2017 re-election bid because 1.5 percent growth is generally considered by economists as the level where unemployment starts to ebb.

The data came at the end of a week that saw the number of jobless people drop by the most since 2000.

 

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