Macroeconomic environment, Manufacturing production and confidence indicators, International prices Commodity prices and EUR/USD exchange rate
Macroeconomic environment
Xerfi's scenario for 2024
Slight acceleration in GDP in Q1, but full-year growth is forecast to remain below 1%
Slight acceleration in GDP in Q1, but full-year growth is forecast to remain below 1% France's GDP growth accelerated slightly in the first quarter of this year, posting an increase of 0.2% (compared with a 0.1% growth rate in the previous two quarters). Consumer spending remained resilient (+0.4% over the quarter) and investment rebounded slightly (+0.3% after two consecutive drops in the last two quarters of 2023), explaining this slight improvement in the macroeconomic outlook. Nevertheless, households remain cautious in the face of economic uncertainty and continue to have a high propensity to save, limiting the potential for a strong recovery in consumption in the medium term. Although inflation is slowing, it remains high and continues to put a strain on purchasing power. On the employment front, the unemployment rate stabilised at 7.5% after rising throughout last year, while job creation and hiring intentions declined. Business insolvencies are approaching their all-time highs, with almost 16,000 cases opened between January and March, particularly in the building and hotel/restaurant sectors. Against this backdrop, GDP growth is expected to settle at 0.8% in 2024, slowing down slightly compared with last year.
Industrial activity and business climate
Manufacturing production and confidence indicators
Manufacturing activity heading for a further slowdown in 2024
Manufacturing output grew very moderately in 2023 (+0.7% in volume terms over the year), before contracting slightly at the beginning of 2024 compared with the level reached in Q4 2023. The main growth driver last year was the recovery in the production of transport equipment, both automotive (+10%) and aeronautical (+14%). On the other hand, activity in many sectors fell into negative territory, penalised by the fall in household consumption and/or by a loss of competitiveness due to high energy costs in Europe. This is particularly the case in the food industry, plastics, chemicals, non-metallic construction materials and the paper industry.
Growth will remain weak in 2024 (+0.3%). The production of capital goods will decline slightly, mainly due to a slowdown in business investments, while materials production will be hit by the new construction crisis. The automotive industry activity will fall again, hampered by a transition period with models ending their commercial life and the full-scale production of new vehicles not yet launched. One of the main positive points that will prevent growth from plunging into the negative in 2024 will be the recovery in the food industry, benefiting from a resurgence of consumption related to the easing of inflation.
Business climate stabilises at low level in May
The general business climate stabilised in May at 99, below its 'normal' level corresponding to its long-term average (equal to 100 by construction). In detail, we observe a deterioration in the industrial business sentiment (-1 point compared to April) and in retail trade (-3 points), while the indicator remained stable at 101 in construction and improved slightly in services, rising from 100 to 101.
The employment climate remained stable at 102, above its long-term average.
International prices
Commodity prices and EUR/USD exchange rate
Towards a slight rise in oil prices to around $84/barrel on average over 2024
World oil demand rose exceptionally in 2023 (+2.5 million barrels/day) due to the mechanical rebound in Chinese demand, which was constrained in 2022 by health restrictions, while OPEC+ supply cuts pushed the world market back into deficit. In 2024, demand growth should be more moderate (+1.1 million barrels/day according to forecasts by the International Energy Agency). The recent rise in oil prices above $80 a barrel is encouraging a pick-up in production outside OPEC, as illustrated by the production increases observed in the United States, Canada and Brazil since last summer. Against this backdrop, the OPEC+ countries will find it difficult to meet their self-imposed production quotas, fearing a loss of market share in a context of high prices. Furthermore, after contracting sharply in 2020, investment in new extraction capacity has started to rise again, but remains well below pre-Covid levels, limiting the potential for a recovery in global supply and setting a floor for the potential fall in prices over the medium term. As a result, beyond the geopolitical uncertainties (conflicts in the Middle East and Ukraine) which may cause temporary swings, we expect the price of oil to stabilise just below $85/barrel, as an annual average, in 2024.
Industrial metal prices followed a downward trend between the last spring and autumn, against a backdrop of sluggish economic conditions and a normalisation of mining supply conditions, but upward pressure reappeared this winter and strengthened during the spring, particularly on copper prices, in response to economic news (monetary policy decisions, global growth forecasts) and political news (growing tensions in the Middle East since November). In our scenario, metal prices should fall more moderately in 2024 than in 2023, or even rise slightly in the case of copper, aluminium and zinc.
