French household consumption soft start in Q2

French household consumption of goods stabilised in April, posting growth of 0.1% m/m. A rebound in manufactured goods drove the rise, edging up 0.3% over the month. Meanwhile, the fall in consumption of energy was significantly less pronounced (-0.3% m/m after -3.3% in March) as petroleum products turned positive, increasing by 1.5% m/m, notes Barclays.

Within engineered products, consumption of textiles and leather were up by 1.2% m/m while auto consumption increased only by a marginal 0.1% m/m. However, these increments were offset by negative trends in household durables and other engineered products (-0.2% m/m, each).
This outturn remains consistent with a carryover of -0.2% for quarterly growth in Q2, following a strong rise of 1.6% q/q in Q1. Total consumption (including services was also up strongly in Q1 (+0.8% q/q). Consumption is likely to continue to grow in Q2, but at a lower pace, as the boost from lower oil prices gradually fades, says Barclays.

"Easy financial conditions and a stabilising labour market should support households' spending further in the near term, although a slowdown was unavoidable. French growth should gradually rebalance in the coming quarters, as investment and exports are expected to gradually strengthen as reforms aimed at boosting profit margins and competitiveness begin to pay off", expects Barclays.