The French economy, Europe's third-biggest, expanded 0.8 percent in the second quarter, as companies lifted investment, boosted stockpiles and increased exports.
Investment spending, accounting for about a fifth of gross domestic product, rose 1.8 percent from the first quarter, when it increased 0.8 percent, according to Paris-based statistics office Insee. Exports, accounting for about a quarter of GDP, rose 1.1 percent, up from the first quarter's 0.7 percent.
French growth may have peaked as companies were reluctant to hire and oil prices this month surged to records, said Marc Touati, chief economist at Natexis Banques Populaires SA. Consumer spending slowed from the first quarter as the jobless rate in June equaled a four-year high of 9.9 percent.
"Optimism over French growth seems misplaced," Touati said in a note following the GDP report. The employment market "remains hopeless."
The GDP number confirms the estimate Insee provided last week. The agency did not provide any details in its earlier report. It does not provide year-on-year figures. The economy expanded 0.8 percent in the first quarter.
Investment Plans
France's seasonally adjusted GDP, the total value of goods and services, totaled 360.2 billion euros (US$445.7 billion) in the quarter, 3 percent higher than a year earlier.
French executives say they are likely to increase investment by 8 percent this year, according to a quarterly Insee survey of 2,626 companies published today. While that's unchanged from April, manufacturers' expectations rose to 6 percent from 5 percent and consumer goods companies' increased to 3 percent from unchanged.
Consumer spending, which accounts for about half the economy, slowed to 0.7 percent from the first quarter's 0.9 percent, which was the fastest pace in more than two years.
Reflecting companies' response to consumer demand and rising exports, inventories contributed 0.6 percentage point of GDP growth, according to the Insee report. Domestic demand, excluding inventories, contributed 1 point.
Imports rose 3.8 percent from the first quarter, outpacing export growth. Net trade reduced GDP growth by 0.8 percentage point.
Consumer Spending
France almost doubled the pace of Germany's 0.5 percent second quarter expansion as household spending stagnated in Europe's largest economy. French shoppers dug into their savings to shop, lifting sales at companies such as Orange SA.
Sales at the mobile-phone unit of France Telecom SA rose 11 percent in the first half. The company added 25,000 users in France in the second quarter.
Consumer spending on manufactured goods climbed 4.2 percent in June, the fastest growth in almost eight years, and industrial production increased 0.2 percent. Households' investment accelerated to 2.2 percent from 0.8 percent, a result of a strong housing and construction market, said Florence Banger, an economist at CDC Ixis Capital Markets in Paris.
Slowing Growth
France's economy will likely rise 2.5 percent this year, Trade Minister Francois Loos said Wednesday. Households spending should continue in coming months, government's spokesman Jean- Francois Cope said yesterday. The economy grew 0.5 percent last year, the slowest in a decade and the government initially forecast 1.7 percent growth for this year.
The government reports quarterly GDP at 1995 prices and adjusted for seasonal and calendar distortions. At current prices, second quarter GDP expanded at 1.5 percent, according to Insee. The GDP deflator, a measure of price changes used to calculate the difference between nominal and inflation-adjusted GDP, climbed 0.6 percent.
Touati said he reckoned the pace of growth would slow to about 2 percent annually. He said in his note that about one-fifth of France's first-half growth resulted from one-time events, such as a favorable calendar, the timing of retailers' sales and a rebound from a slump last year.
Executives' confidence may decline, crimping growth, amid rising oil costs and concerns over demand in key export markets such as the US and Japan, said Phyllis Papadavid, an economist for Lehman Brothers Inc in London. Growth in France "is likely to lose some steam," she said in a note.
Exports
In the three months ended June, France added jobs for only the second quarter since 2002.
Increased shipments to Asia by companies such as Pernod Ricard SA helped lift exports. The world's third-largest liquor maker said sales of wine and spirits rose 5.2 percent in the second quarter as demand for Chivas Regal scotch and Martell cognac increased in Asia.
The government reported earlier this week that Airbus SAS, France's third-largest exporter, shipped 20 planes in June, worth 1.28 billion euros, up from May when it delivered 13 planes overseas worth 896 million euros.
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