The Bank of France said on Wednesday that France’s growth outlook strengthened at the start of the year, with firms reporting a more robust rebound in activity than anticipated. Based on its latest monthly business sentiment survey, the central bank estimated the euro zone’s second-biggest economy is on track to expand by 0.2-0.3% in the first quarter compared with the previous three months, when GDP grew by 0.2%.
The survey found improved confidence among companies across industry, services and construction as they entered February. That improvement occurred even as firms continued to register lingering uncertainties tied to global trade tensions.
Industrial output showed renewed gains in January, extending a multi-month run above its long-term trend. The Bank of France identified the improvement as being led by sectors linked to defence and aerospace demand, notably electronics and machinery.
Services and construction also recorded advances in the survey, with both sectors outperforming firms' expectations from the prior month. Companies indicated they expect activity to keep rising in February, with industry expected to expand at a solid pace while services and construction point to more moderate growth.
While reported uncertainty eased further in services and construction, the central bank noted that uncertainty remained elevated overall and edged up slightly within industry - a reflection of trade-related tensions. Cash-flow conditions were assessed as still slightly weak in manufacturing, contrasting with improvements seen in services, though the Bank of France highlighted sharp divergences across service segments.
Supply chain tensions were described as contained on the whole but had deteriorated in aerospace and electronics. The survey also flagged rising recruitment difficulties, particularly in construction.
Altogether, the Bank of France's monthly business sentiment survey presents a picture of broad-based, if uneven, momentum across the main sectors of the economy as the quarter begins - with industry leading the upswing and services and construction contributing to a steadier, measured advance.