France Sees Q4 GDP Growth
French industrial production posted a surprisingly strong rebound in November, adding to a brightening outlook among both consumers and companies to signal a sharper-than-expected pick-up in activity in the eurozone’s second-biggest economy.
The 2.2% rise in French industrial output, which beat even the most optimistic forecast in a Reuters poll of economists, comes after better-than-expected consumer spending figures for the same month.
It suggested an acceleration in French economic activity at the end of the year after two insipid quarters marred by strikes, bad harvests and diminishing tourism.
“This strong reading comes as a positive surprise, although manufacturing surveys had been pointing to a pick-up in sectoral momentum at the end of 2016,” Unicredit economist Tullia Bucco said in a note.
Surveys from the official statistics office INSEE have flagged a surge in morale to multi-year highs amongst both companies and consumers at the end of the year. A low euro has also boosted exports to an 18-month high, with private surveyor IHS Markit flagging an acceleration in factory activity in December.
In November, a 3.4% rise in transport material production, which includes cars and aircrafts, was particularly noteworthy, INSEE data showed.
The boost comes as Germany, the eurozone’s largest economy, is also showing signs of unexpected strength.
Industry experts and records of aircraft movements show a record burst of activity at Airbus plants in France and Germany at the end of the year to whittle down record order backlogs, with December deliveries on track to set a monthly record for the Toulouse-based company.
Economists took heart in the strong French data, with Barclays’ Francois Cabau raising his fourth-quarter gross domestic product forecast to 0.5% from 0.4%, while JPMorgan’s Raphael Brun-Aguerre lifted his projection of annualized GDP to 2% from 1.25%.
However, Natixis’ Philippe Waechter said the significant increase in GDP in the final quarter will not be enough to boost full-year output well above 1.1%, below the government’s official forecast of 1.4%. “But it puts French activity on the right track for 2017,” he said.
Meanwhile, the Bank of France said Monday that the country’s economy would expand by 0.4% in the fourth quarter, reaffirming an earlier GDP growth forecast made last month.
It added that the business sentiment indicator for the manufacturing industry rose to 102 points in December compared to 101 in November–its highest reading since May 2011. “Business leaders expect industrial production to rise slightly in January,” it said in a statement.
Hosting the Euro 2016 football tournament cost France less than €200 million ($211 million) but brought some €1.22 billion into the country, according to figures released by the ministry of sports Tuesday.
There was controversy over the public funds poured into the tournament, with some €24 million—double the expected cost—spent on security in light of an increased terrorist threat.
The state spent a further €160 million on building and renovating venues for the June and July event, while private funds and tournament organizer UEFA covered the remaining costs.
But Euro 2016 brought €1.221 billion into the country both in tourism and spending directly related to the organization of the tournament, according to data compiled by the Center of the Law and Economics of Sport at Limoges University and the consultancy firm Keneo.
In calculating the figures, researchers took into account the loss from potential tourists who would have stayed away from France to avoid the tournament, as well as the state funds which could have been used elsewhere had they not been set aside for venues.
The average tournament visitor spent €154 a day, with most of that going on accommodation and eating out, the study said, with tourism providing a €625.8 million boost to the country.
UEFA spent some €360 million on organizing the tournament in the country, while 24 participating teams gave the economy a €34.9 million boost.