Economic Data from France Disappoints ahead of a Busy U.S Session

After a relatively busy Asian session, on the economic data front, the French economy was in focus early in the European session.

2^nd estimate GDP figures for the 4^th quarter and consumer spending numbers for January were in focus.

Prelim inflation figures for February were also on the docket this morning.

French Stats Disappoint

In January, consumer spending slumped by 4.6%, month-on-month, partially reversing December’s 22.4% rebound. Economists had forecast a 3.5% decline.

According to Insee.fr,

• The consumption of manufactured goods tumbled by 12.9%.
  • Durable goods purchases fell by 9.9%, with spending on clothing and textiles sliding by 27.8%.
  • The 27.8% slide in spending on clothing and textiles left spending down by 14.4% year-on-year.
  • Other manufactured goods purchases fell by a relatively more modest 7.7%.
• Energy consumption rose by 6.3%, however, with food consumption increasing by 1.7%. The upside in energy consumption was attributed to colder weather conditions.

4^th quarter GDP numbers were also EUR negative. According to 2^nd estimates, the economy contracted by 1.4%, quarter-on-quarter, revised down from a 1^st estimate 1.3%.

According to Insee.fr,

• Gross disposable household income increased by 1.5%, in spite of the contraction in the French economy.
• The combined effect of the rise in purchasing power and drop in consumption expenditure (-5.4%) strongly increased households’ savings rate, which stood at 22.2%.
• In the 4^th quarter, a 2^nd national lockdown coupled with curfews weighed on the economy.
• In spite of this, the contraction was moderate compared with the 2^nd quarter contraction stemming from the first lockdown.
• Gross fixed capital product rose by 1.1%, while total domestic demand hit reverse.
• Foreign trade continued to recover, with exports rising by more than imports, delivering a positive contribution to GDP.

Prelim inflation figures were not much better. In February, consumer prices fell by 0.1%, partially reversing a 0.2% rise from January.

According to Insee.fr, the annual rate of inflation softened from 0.6% to 0.4% mid-way through the quarter.

Market Impact

Ahead of the stats, the EUR had struck a current day high $1.21830 before falling to a pre-stat and current day low $1.21290.

Upon the release of the inflation figures, the EUR rose from $1.21346 to a post-stat high $1.21594 before easing back.

At the time of writing, the EUR was down by 0.12% to $1.21520.

For the European majors, there was no support from today’s stats.

At the time of writing, the DAX30 and the EuroStoxx600 were down by 0.87% and by 0.91% respectively. The CAC40 was down by 1.06%.

Next Up

A busy U.S session. Key stats from the U.S include inflation and personal spending figures that will draw plenty of attention.