French goods consumption to recover in June but to contract in Q2

Societe Generale notes:

We expect the French National Statistical Institute (INSEE) to report that consumer spending on goods increased by 0.7% mom in June (1.5% yoy). Energy consumption is likely to recover after the weakness recorded in the last two months and should increase by 2.6% mom in June. The non-energy component is also likely to feed through, on the back of summer sales and buoyant auto sales. 

Overall, goods consumption likely contracted by 0.1% qoq in Q2. This is mainly attributable to energy consumption which we expect to have dropped by 1.7% qoq. As far as non-energy goods consumption is concerned, it likely rose by 0.2% qoq, mainly boosted by the automobile sector. Household consumption was the main growth driver in Q1, boosted by a combination of lower oil prices and low inflation. Further out, we expect consumption to ease over the coming months, on the back of increasing oil prices and recovering inflation.