French growth revived in the third quarter, buoyed by industrial production and consumer spending, before the onset of a slowdown that economists forecast may extend into next year.
Gross domestic product increased 0.4 percent from the second quarter, when it fell a revised 0.1 percent, the Paris- based statistics office, Insee, said today. Economists predicted growth of 0.4 percent, the median of 15 estimates in a Bloomberg News survey showed. Output was up 1.6 percent from the third quarter of 2010.
“Behind the quarterly figure is strength in July and August, followed by a marked turn in the hard data in September,” Michel Martinez, an economist at Societe Generale SA in Paris, said before the data were released. “The year-end will be flat at best. After that the outlook depends on budget tightening and the euro crisis, the latter in particular.”
Europe’s sovereign debt crisis is biting into the real economy, discouraging the investment and hiring that helped drive France’s expansion at the beginning of the year. Confidence among French factory executives fell to a two-year low in October, suggesting GDP will be unchanged in the fourth quarter, the Bank of France said last week.
German, French GDP Grew in Q3 on Spending
German and French economic growth rebounded in the third quarter on stronger consumer spending, even as the region braces for a recession sparked by an escalating sovereign debt crisis.
Gross domestic product in Germany, Europe’s largest economy, rose 0.5 percent from the second quarter, when it increased 0.3 percent, the Federal Statistics Office in Wiesbaden said today. The French economy, Europe’s second- biggest, expanded 0.4 percent after contracting 0.1 percent in the previous period. The growth data were in line with the median forecasts in Bloomberg News surveys of economists.
Germany and France may succumb to the debt crisis in the fourth quarter as growth falters across the euro region, their largest export market. The Spanish and Belgian economies stalled in the three months through September, while Portugal’s contracted for a fourth straight quarter. French bond yields have jumped almost 1 percentage point in two months, and Italy’s borrowing costs last week surged above 7 percent, the level that triggered bailout requests from Greece, Portugal and Ireland.
European Stocks Drop as Monti Faces Resistance
European stocks resumed their decline, falling for a second day, as Mario Monti, Italy’s premier-in-waiting, struggled to get political parties to help form his new Cabinet. Asian shares and U.S. index futures also retreated.
Finmeccanica SpA (FNC) sank 12 percent said it will sell 1 billion euros ($1.4 billion) in assets after predicting a loss for this year. Kabel Deutschland AG slid 2.5 percent after the company narrowed its yearly sales forecast.
The benchmark Stoxx Europe 600 Index fell 0.7 percent to 236.9 at 8:40 a.m. in London. The gauge has declined 18 percent from this year’s high on Feb. 17 as policy makers struggle to contain a debt crisis that has Greece on the edge of a default.
“There is still a lot of tail risk in Europe,” Peter Garnry, an equity strategist at Saxo Bank A/S, said in an interview with Bloomberg Television from Hellerup, Denmark. “We want to be in a more hedged position going forward. In Europe and Asia, we would definitely take the position of being neutral. We’ve shifted towards consumer staples and health care.”
