2023-12-11 19:00:11
Published on Dec 11 2023 at 8:00 p.m.
The French economy should avoid recession, namely a decline for two consecutive quarters in GDP according to the conventional definition. But she will be standing still or almost. According to the latest monthly forecasts from the Banque de France, published this Monday, activity would increase by a small 0.1% in the fourth quarter in France, after having fallen by 0.1% during the previous three months.
“Activity would resist thanks to services,” indicated Olivier Garnier, chief economist of the institution, without commenting on a possible revision of the growth forecast for the whole of 2023 (+0.9% estimated in September ) to take into account a third quarter that was less good than expected.
Fall in housing starts
According to the survey carried out by the Banque de France between November 28 and December 5 among 8,500 business leaders, activity remained well oriented in November in services even if the situation there is contrasted – temporary work and , for example, is doing less well. And it should continue to grow in December. As the end-of-year holidays approach, catering and car rental bosses are optimistic and “expect a surge in activity”, according to the institution.
In other sectors, the situation is much more gloomy. In the building, the finishing work activity continues. On the other hand, structural work, which has been in difficulty for several months, expects to be hit hard by the effects of the fall in construction starts in December.
In the industry, there is stagnation. The production capacity utilization rate fell to 76%, “the lowest level recorded in three years”, after a peak in the summer of 2022, according to the monetary institution. More worrying, it is “significantly” below its 15-year average with marked declines in automobiles and chemicals.
Manufacturers anticipate a decline in activity in December given the deterioration of their order books, now “below their ten-year average to be closer to their 2013-2014 level”, notes Olivier Garnier. If aeronautics and pharmaceuticals should do well, on the other hand, production is expected to decline in the automobile, rubber-plastic, and clothing-textile-shoes sectors.
Normalization on the price front
This weakening of demand favors a return to normal on the inflation front. In the three major sectors, the share of companies having increased their prices is stabilizing at a level close to pre-Covid, according to the Banque de France.
On the other hand, the situation remains somewhat paradoxical when it comes to hiring: despite the rebound in the unemployment rate in the third quarter, to 7.4% of the active population, 45% of managers say they are facing recruitment difficulties.
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