French Q1 GDP contracted 1.2% q/q, slightly better than our median of 1.3% but with Q4 numbers revised down to -1.5% q/q from 1.1% q/q reported initially. Economic activity was down 3.2% y/y in the first quarter of the year, after contracting 1.7% y/y in the previous quarter. French numbers look much less dismal than the German figures released earlier which is likely due to the fact that Germany was hit more by the sharp global slowdown. There is no breakdown with the preliminary numbers, but activity is likely to have been down across the board, with only government consumption left to support the economy.
French Q1 employment declined -0.9% q/q, after falling 0.7% q/q in Q4 last year. Indeed, this was the fourth consecutive quarter of decline, which highlights the extend of the deterioration in the labour market. The slump is driven mainly by job cuts in teh manufacturing and services sector, while the construction sector has been holding up surprisingly well, with employment actually up 0.1% y/y, the only sector that reported an improvement over the year. Despite the drop in employment, wages continue to rise and were up 0.8% q/q in Q1, after rising 0.3% q/q in the previous quarter.