Household spending likely to be France’s main growth driver in Q1

In January, France’s consumption grew strongly by 0.6% m/m and 0.6% y/y. Consumption growth was mainly driven by energy consumption as the weather turned colder in January. But the weather turned warm again in February, slightly above the long-term average for the month. Hence, energy consumption is likely to have weakened in the month, but non-energy consumption is expected to have grown decently, according to Societe Generale.

In January, non-energy consumption growth was nearly flat at 0.1% m/m. However, new car registrations in February grew 2.1% m/m as compared with January’s 0%, implying rebound in durables spending. Household consumption is likely to be the main driver of growth again in Q1. A combination of gradual rebound in job market and low inflation is likely to boost household consumption, according to Societe Generale.

“The carry-over for Q1 15 (assuming a similar profile in March) points to a 1.1% qoq increase in household goods consumption”, says Societe Generale.