French GDP expands as expected in Q1 despite slump in trade

France's economy slowed a tad at the start of the year as household spending took a breather and amid a big drag from foreign trade.

Gross domestic product in the Eurozone's second largest economy expanded at a 0.3% quarter-on-quarter clip during the first three months of 2017, which is down from the 0.4% pace observed during the prior quarter, according to INSEE.

That was one tenth of a percentage point less than economists had forecast but was offset by an upwards revision of the same magnitude to the estimate for the prior quarter.

Consumer expenditures slowed from growth of 0.6% quarter-on-quarter observed in the last quarter of 2016 to just 0.1% in quarter one, mainly due to lower spending on energy which slumped because of unusually warm weather.

However, spending on goods was slower too as the French bought fewer cars after a strong showing in the fourth quarter.

Government spending increased by 0.4% on the quarter (consensus: 0.3%).

Foreign trade on the other hand subtracted 0.7 percentage points from the quarterly rate of growth but the resulting rise in inventories led to a 0.6 percentage point boost to the headline GDP figure as stockpiles built up, Claus Vistesen, chief Eurozone economist at Panthoen Macroeconomics said in a research note sent to clients.

"These two numbers are linked at the hip because falling net trade usually is associated by inventory accumulation via imports of intermediate goods."

Domestic demand excluding inventories rose by 0.4% on the quarter.