France Jumps out of Recession

The French economy jumped out of recession in the second quarter, aided by stronger domestic demand and a rebuilding of stocks, official statistics showed Wednesday.

The euro zone’s second-largest economy expanded 0.5% in the second quarter from the first quarter of this year, statistics bureau Insee said. The expansion in the second quarter follows two consecutive quarters of contraction–the common definition of a recession.

Economists polled by Dow Jones Newswires had expected only a 0.2% quarter-on-quarter expansion in the second quarter.

France had been stuck in neutral, providing insufficient growth to prevent unemployment from reaching a 15-year high of 10.8% at the start of the year. Gross domestic product has fluctuated between mild growth, zero growth and slight contractions every quarter for two years.

The data for GDP Wednesday mark a shift from that trend and the steepest month-on-month rise in economic output since the beginning of 2011.

Consumer spending–which represents over half of French GDP–rose 0.4% in the second quarter from the first this year and public spending 0.5%. Still, investment of non-financial companies continued to trend downwards, falling 0.1% in the second quarter from the first.

Overall, domestic demand contributed 0.3 percentage points to GDP. Companies building their stocks boosted GDP by 0.2 points.

Source: Marketwatch