French fourth quarter 2015 GDP figures stronger than they appear, economists say

The French economy slowed down slightly at the end of 2015, as household consumption retreated in the face of transitory factors, but the data were stronger than they appeared, economists said.

Gross domestic product in the euro area´s second largest economy registered an advance of 0.24% quarter-on-quarter over the three months to December, according to INSEE, the country´s statistics office.

That was only slightly below the the French central bank´s projection for GDP to expand by 0.3%, Barclays´s Francois Cabau said in a research report sent to clients.

For all of 2015, the economy registered an expansion of 1.1%, "a marked upshift" from the 0.4% gain seen in the year before.

Mild weather, Paris attacks hold back consumption

Household consumption fell at a 0.4% quarter-on-quarter pace in the fourth quarter - having been negatively impacted by mild weather and the terrorist attacks in Paris - nearly reversing the previous quarter´s gain, Cabau pointed out.

"Overall, spending fell 0.4% quarter-on-quarter in Q4, but the underlying trend in non-energy consumption points to a rebound in Q1, assuming the weather doesn’t continue to play tricks with utility spending," Pantheon Macroeconomics chipped in.

The fall in consumption came alongside a 0.3 percentage point drag from net exports.

However, government spending and fixed asset formation - a gauge of investment - increased by 0.4% and 0.8%, respectively, versus the previous quarter.

Investment in construction was particularly strong, registering its first increase since the third quarter of 2013.

"The reasons for the private consumption slowdown in Q4 15 are well identified and should be temporary in nature (mild weather, impact of terrorist attacks). Adding the investment positive surprise, we think that French GDP is poised to accelerate significantly in Q1 16.

"In sum, we project French GDP to accelerate slightly this year, increasing by 1.4%, consistent with 0.4% q/q sequential prints (Government: 1.5%; INSEE: 1.0%)," Cabau said.