France continues its cyclical recovery, GDP likely rose by 0.3% qoq in Q2

French consumption, government spending, investment and net exports are seen to positively and evenly contribute to the economic activity (0.1pp of GDP), mainly led by a lower oil bill, a weaker euro and easing credit conditions. 

"French GDP growth to come in at 0.3% qoq in Q2, following a relatively strong 0.6% qoq in Q1", says Societe Generale. 

The stocks component is expected to contribute negatively by 0.1pp to GDP growth. Hence, France continues to experience a cyclical recovery. 

"GDP growth is expected at 1.2% in 2015 and 1.6% in 2016. In comparison to previous recoveries, the recovery in H1 was consumption driven; in Q1 consumption contributed 0.5pp to total growth of 0.6% qoq", added Societe Generale.

Furthermore, the strong contribution to growth from stocks in Q1 (0.5 pp), suggests that businesses expected a pick-up in consumption in Q2. Nonetheless, business sentiment levels, such as the PMI, INSEE and Bank of France surveys, are historically consistent with a growth rate of 0.3-0.4% qoq. 

However, sentiment levels continued to hover just below the long-term average level and, as a result, the conditions for an investment-driven cyclical recovery are not present yet.