France's economic activity should progress little in the fourth quarter due in particular to the post-Olympic Games “backlash”, in a context marked by uncertainty and wait-and-see attitude, the Bank of France indicated on Tuesday.
Activity should record a “slightly positive progression” between October and December, but this increase would be offset by the “backlash” induced by the end of the Olympics, “estimated at -0.2 point of GDP”, specified the institution in its monthly economic survey, without quantifying the level of growth expected in the fourth quarter.
The Olympics fueled growth in the third quarter (+0.4%), benefiting the services sector.
The activity benefited in particular from ticketing revenues and sales of audiovisual broadcasting rights. For the whole of 2024, the Banque de France anticipates growth of 1.1%, like the government and the National Institute of Statistics (Insee), which expects zero growth during the last quarter.
“Instability”
According to the economic survey carried out among around 8,500 companies questioned between October 29 and November 6, activity increased in October in industry, supported by aeronautics and the agri-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”, underlined the Bank of France.
Industrial order books are still considered “bare”, except in aeronautics. In commercial services, activity slowed down while in construction, structural work benefited from the resumption of projects which had been postponed by the Olympics.
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 feedback, remains “relatively high across all sectors.”
“Business leaders mention uncertainty over national economic and fiscal policy, and the instability of the geopolitical situation (particularly before the US elections), which tend to put investment projects on hold,” according to her. .
Thus, in services, temporary work fell for the second consecutive month, “in particular for reasons of wait-and-see attitude attributed to the context of uncertainty”. In the building, customers are waiting to see how the “MaPrimeRénov'” system will evolve as part of discussions on the budget for 2025.
Standardized prices
As part of the budgetary effort of 60 billion euros that it plans in 2025 to restore ailing public finances, the government wishes to reduce the subsidies of 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 the companies is part of an economic environment which promises to be tense in November and December in France, with social plans notably at Michelin and Auchan, and calls for a cascade of strikes.
Industry Minister Marc Ferracci warned on Saturday that we should “probably” expect other 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 start of a violent industrial bloodletting”, with the estimated disappearance of “more than 150,000 jobs” or more.
Concerning 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 encountered them in October compared to 35% in September, and supply difficulties remained stable (10%). The latter are, however, higher in aeronautics (37%) and automobiles (16%).
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