Bank of France to point to solid growth in 4Q - SocGen

The Banque of France will release its first estimate of 4Q GDP growth, probably at 0.5% qoq, according to analysts at Societe Generale.

Key Quotes

“We expect the October Bank’s index of business sentiment in the manufacturing sector to rise from 104 to 105.6 (0.6 standard deviations above the long-term average). That would partially stop its diverging trend with the PMI and INSEE indicators (respectively at 1.1 and 1.0 standard deviations above the mean).” 

“Based on our own econometric models, this reading would be consistent with firm growth in 4Q17 of 0.6% qoq, or 2.4% p.a. The BoF survey has a sample of more than 10,000 companies, so it is generally reliable. It is completed at the end of the month, i.e. later than the INSEE and the PMI surveys which are conducted in the middle of the month. Looking ahead, we expect the manufacturing index to soften over the next 12 months, in line with our view that global demand will slow down.”

“Solid French industrial production in September

We expect a firm 1.1% mom gain in French industrial output in September. The INSEE business climate for the manufacturing sector reached a lofty 111.4 in October, the highest since 2011, leading us to expect a significant rise in manufacturing production. Meanwhile, there should be a further boost from the energy output (petroleum and gasoline products). Our forecast would be consistent with a carryover of around 0.7% qoq in 4Q in industrial production.”