French business activity grew in March; April outlook slows, GDP +0.3%
The Banque de France's monthly business survey indicates continued growth in French industry, services, and construction for March. However, business leaders anticipate a slowdown in April amid heightened uncertainty, with Q1 GDP growth confirmed at up to 0.3 percent.
March activity defies uncertainty
According to a survey of approximately 8,500 companies, activity in March continued to grow at a similar pace to previous months across industry, market services, and construction, despite a context dominated by the war in the Middle East.
Industrial production strengthened significantly, exceeding previous forecasts, driven by technology, defense, and a catch-up effect in the automotive sector.
The capacity utilisation rate rose to 77 percent, closer to its long-term average.
Momentum in services and construction remained broadly favorable, though trends varied by sector.
Recruitment difficulties remained stable, concentrated in skilled trades and construction.
The Banque de France confirms its forecast of GDP growth of up to 0.3 percent in the first quarter of 2026, based on these results and other indicators.
April outlook darkens amid rising costs
Business leaders reported heightened uncertainty, which is weighing on their short-term outlook.
For April, they expect activity to slow down in industry and to lose momentum in services and construction.
This heightened uncertainty, comparable to the early months of the war in Ukraine, stems from concerns regarding future price movements, rising freight costs, and supply chain disruptions due to the Middle East conflict.
Rising costs, particularly for energy and petroleum products, remained concentrated in certain exposed sectors in March, with pass-through to selling prices limited.
However, significantly more companies are considering modest price increases for April, suggesting a shift in pricing strategies.
Resilience tested, vigilance required
The survey highlights the French economy's resilience in March, demonstrating its ability to maintain growth despite significant geopolitical headwinds.
However, the anticipated slowdown and rising uncertainty for April suggest that this resilience will be further tested in the near term.
This indicates that while current performance is solid, future growth remains vulnerable to external shocks and persistent cost pressures, necessitating careful monitoring.
Source: Monthly Business Survey – Start of April 2026
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