France Q2 GDP final: 0.0% q/q, below +0.2% prelim

• The previous quarter recorded a 0.2% contraction.
• Year-on-year GDP growth stood at +0.5%, falling short of the +0.7% consensus.
• The prior year-on-year reading was +0.9%.

The French economy posted zero growth in Q2 2026, with real GDP unchanged from Q1 after a 0.2% decline in the first quarter. Although a sharp export recovery helped steady activity, household purchasing power continued to weaken and savings dropped sharply as inflation picked up.

Consumer spending expanded 0.3% in the quarter, recovering from a 0.3% fall in Q1. However, investment remained a drag, with gross fixed capital formation slipping 0.3%, reflecting persistent softness in market services investment and another drop in construction. Government consumption gave modest support, rising 0.4%.

The main positive factor came from external trade. Exports rebounded 2.9% after a 3.0% decline in the previous quarter, driven notably by the aeronautics sector. Imports also recovered but at a slower pace, increasing 1.1%. Consequently, net trade contributed 0.6 percentage points to GDP, offsetting weakness elsewhere.

That support was largely offset by inventory changes, which subtracted 0.7 percentage points from growth after adding 0.9 points in Q1.

While nominal household disposable income rose 0.5%, faster consumer price increases eroded purchasing power. Consumer prices accelerated 1.0% in the quarter, leading to a 0.5% drop in real disposable income and a 0.6% fall in purchasing power per consumption unit. Faced with declining real incomes, households reduced their savings rate to 17.2% from 17.9% in the previous quarter as consumption recovered.

Labour market indicators remained muted. Total hours worked declined for a second straight quarter, falling 0.1%, while overall employment was little changed. Small gains in self-employment offset ongoing weakness in salaried positions.

Corporate profitability held up despite higher energy costs. The profit margin of non-financial corporations stayed at 31.5% of value added, unchanged from Q1. Rising energy prices weighed on margins through a deterioration in the terms of trade, but this was largely balanced by lower real wage costs.

Public finances showed little change in the quarter. The general government deficit remained at 5.1% of GDP, as higher tax and social contribution revenues were broadly matched by increased spending on social benefits and interest payments.