The Bank of France revised upward its forecast for second-quarter economic growth on Thursday, citing increased activity in June in the industrial, services and construction sectors.
The central bank now expects the euro zone’s second-largest economy to grow 0.2% in the second quarter, up from its previous estimate of flat growth. This adjustment comes after a 0.1% contraction in the first quarter.
Activity strengthened in June after a weak month of May, which was affected by several public holidays. Businesses maintained operations during the record heatwave late in the month by adjusting business hours to avoid the hottest periods of the day.
The central bank said extreme temperatures slowed some construction projects and required changes to factory schedules, but companies generally avoided major disruptions.
Some service sector companies benefited from the heat wave. Hotels have witnessed an increase in demand from customers looking for air-conditioned rooms, and requests for cooling systems have also increased.
The upgrade was mainly driven by services, including stronger consumer services, information and communications, hospitality and transportation. Manufacturing also provided support, although construction is expected to decline during the quarter, the bank said.
The central bank’s monthly business sentiment survey of 8,500 companies showed strengthening activity in industry in June and a rebound in services and construction.
Manufacturing orders were around normal levels and the uncertainty index fell to its level before the start of the Iran war on February 28.
Companies cited international tensions and input costs as concerns, although supply chain difficulties and pressures from raw material and energy prices have eased from previous peaks this year.
Business leaders expect activity to continue to grow in July compared to June, at a more moderate pace in manufacturing and services and only slightly in construction.
Source: Investing.com
