Economic activity increased in July in France, the Banque de France estimated on Wednesday in its monthly economic note, projecting “slightly positive” growth in the third quarter. After a second quarter marked by a sharp rise in gross domestic product (GDP) of 0.5% compared to the first quarter, the central bank estimates that GDP rose by 0.1% over one month in July. “Temporary factors” that supported activity in the spring, such as an increase in naval and aircraft deliveries or a “technical rebound” linked to the end of strikes against pension reform in refineries and transport, will not last. but “do not call for mechanical correction” in the third quarter, the institution believes.
In July, the increase in activity “would be observed in industry and market services, while construction would be stable”, observes the Banque de France on the basis of its survey carried out among 8,500 business leaders between July 21 and August 4. In industry, however, activity is still below its long-term average and production capacity utilization in the manufacturing sector is falling, falling to 77%, compared to 79% in January 2022. The activities of most market services grew, with the exception of personal services and temporary work. And “the activity progresses in the building, mainly in the second work”, notes the central bank.
Business leaders’ view of their cash position remains more negative than usual, although it is stabilizing in industry “due to the continued easing of energy and raw material prices” . Order books are filling up somewhat, except in construction where structural work is penalized by a “clear decline in sales of new individual homes”. Supply difficulties, which had slowed the recovery of many sectors of activity after the Covid-19 pandemic, “are rarefied”, with all the same still more than one in five companies reporting them in the industry, but only 12% in construction.
Finally “the rate of price increase is returning to its pre-Covid level”, whether in industry, services or construction, according to the Banque de France. Business leaders are thus 9% to declare having increased their selling prices last month, against 27% in July 2022. And 6% say to have lowered them, “in connection with the easing of the prices of raw materials”, against only 1% a year ago.
