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French central bank sees 0.2% second quarter growth

French central bank sees 0.2% second quarter growth
French central bank sees 0.2% second quarter growth   -   Copyright  Thomson Reuters 2022
By Reuters

PARIS – France will eke out quarterly growth of 0.2% in the second quarter as parts of the service sector recover from a slump induced by the Omicron COVID variant earlier this year, the central bank said on Wednesday.

That would mark a slight acceleration after growth in the euro zone’s second-biggest economy stalled in the first quarter due to a slowdown in consumer spending brought on by the Omicron variant and a surge in inflation.

On Monday the official statistics agency INSEE also forecast the French economy would return to growth this quarter with a rate of 0.25%.

The central bank based its short-term outlook in part on the findings of its latest monthly survey of 8,500 firms, which found that business activity was largely stable in April in industry, had improved in the service sector and deteriorated in the construction sector.

Firms surveyed expected a pickup this month in both industry and services, but no change was expected in construction.

With global supply chains snarled by the war in Ukraine and COVID lockdowns in China, nearly two-thirds of industrial companies reported problems getting inputs, the highest since the central bank began asking firms about supply problems in May 2021.

Finding adequate staff numbers remained a problem for 52% of firms, unchanged in April from March, although the proportion eased slightly in the service sector to 54% from 56% in March.

With inputs and staff hard to come by, 57% of construction firms reported they planned to raise prices in May, 42% in the industrial sector and 26% in services.