PARIS (Reuters) – French household savings skyrocketed while businesses’ profits plunged in the second quarter amid a coronavirus lockdown, the INSEE stats agency said on Friday, confirming the economy contracted 13.8% in the three months through June.
One of Europe’s strictest lockdowns put the euro zone’s second biggest economy into an unprecedented tailspin in the quarter. It had already contracted 5.9% in the previous three months.
With most shops, cafes and hotels closed from mid-March to May 11, unspent cash pushed the household savings rate up to a record 27.4% of disposable income, while consumer spending – the traditional driver of the French economy – dropped 16.4% in the quarter.
Meanwhile, in the corporate sector, companies saw their profit margins fall to 26%, the lowest since the end of 1983, INSEE’s data showed.
After most businesses were able to reopen in May, activity quickly surged, although there has been some signs that the catch-up is easing after the initial rebound.
Going into the third quarter, consumer spending rose 0.5% in July from June, slowing from a surge of 10.3% in June, INSEE said in a second release. That fell short of economists’ average forecast for an increase of 2.0% in a Reuters poll.
(Reporting by Leigh Thomas; Editing by Alex Richardson)
