French economy expands unexpectedly in second quarter

The French economy expanded unexpectedly in the second quarter of the year, according to government data from INSEE (release).

French gross domestic product (GDP) rose by 0.3 per cent year-on-year in the second quarter of 2013. Analysts had expected to see the economy shrink by 0.1 per cent following the previous quarter’s 0.4 per cent annual contraction.

Quarter-on-quarter, GDP was up more than expected at 0.5 per cent. This was the largest quarterly increase since the first quarter of 2011, beating the 0.2 per cent contraction seen the quarter before and smashing analyst expectations for 0.2 per cent growth.

Household consumption expenditure accelerated , growing by 0.4 per cent after the previous quarter's 0.1 per cent fall.

Total gross fixed capital formation (the acquisition of new assets by households, government and business minus disposal of old assets) fell again, but less sharply than in the beginning of the year (down half a percentage point after falling one percentage point in the first quarter).

Both exports and imports rebounded rising to +2.0 per cent from -0.5 per cent and +1.9 per cent from +0.1 per cent respectively. This means the external trade balance made no accounting contribution to GDP growth this quarter (after a contribution of –0.2 points).

Changes in inventories made a positive contribution again: +0.2 points, after +0.1 points in the first quarter.