The French organisation Procos recently shared insights into the market. In nearly all sectors of French specialty retail, activity in July was disappointing, with an average sales decline of 2.5% compared to the previous year. Especially the sale of home goods faced significant challenges.
Specialty retail ended August with a growth of 1.5% compared to August 2023. Most sectors experienced more dynamic activity than in the same month last year, except for clothing, home goods, and dining, where declines were limited compared to the previous year.
Photo: Dreamstime.
In aggregate, the activity in Paris was very different from the rest of France, negatively impacted by the Olympic Games.
Home goods experienced negative trends from April to August, with only September showing a slight positive change. However, specific areas like furniture and DIY remain significantly affected by ongoing housing issues.
Despite economic pressures, consumer activity remains resilient, with some players experiencing significant growth in the market, including several e-commerce platforms that continue to gain market share.
Economic outlook for the coming months
Europe is facing challenges in 2024, but improvements may come in 2025. Global growth is projected at +3.2% in 2024, similar to the rate in 2023, and expected to rise to +3.4% in 2025. By 2025, global activity should regain the growth pace of the latter half of the 2010s, supported by easing monetary policies.
In advanced economies, growth will vary significantly by country. In 2024, the U.S. and Spain will see robust activity, while Italy and the UK will experience more moderate growth, and Germany will stagnate. These disparities reflect differences in consumption dynamics and export performance.
By 2025, growth rates will converge, with a pick-up in the Eurozone and a slight slowdown in the U.S., primarily due to waning household consumption. Despite remaining dynamic, growth in major emerging economies (China, India, Brazil, and Turkey) will slow compared to 2023, especially in China, where structural imbalances continue to hinder activity.
However, global activity could be challenged by heightened geopolitical tensions, representing the main risk in this scenario. In the U.S., growth is forecasted at +2.5% in 2024, decreasing to +1.9% in 2025, while inflation is expected to decline, reaching the Fed's target of 2% by the end of 2025. The slowdown in 2025 will reflect reduced household consumption, stemming from the depletion of savings accumulated during the pandemic and a cooling labour market.
French economic growth
The Bank of France has revised its growth forecast for the French economy in 2024 upward. It now expects GDP to grow by 1.1% this year, compared to a previous estimate of 0.8%. The end of the year may be weak, with flat growth in the fourth quarter, following a 0.4% rise from July to September, thanks to the impact of the Paris 2024 Olympics.
For 2025, the Bank of France estimates growth at 1.2%. The year will begin with very low growth momentum, "close to 0.2%," but according to its experts, economic activity should accelerate at a quarterly rate of around 0.3% to 0.4% next year, compared to 0.2% on average this year. In 2026, GDP is expected to grow by 1.5%.
In its new forecasts presented on October 9, INSEE continues to anticipate annual growth of 1.1% in 2024, driven in the third quarter by the temporary activity boost linked to the Paris Olympics.
More information:
Procos
www.procos.org