The Champs-Elysees — Paris's main shopping street — during a demonstration © AP

The French economy is closing out the year on a downbeat note, with consumer spending down in November and quarterly growth missing expectations.

In December, confidence among manufacturers dipped, though not as much as expected, with the headline manufacturing confidence index falling to 104 from 105 in November, according to the French Institute of Statistics and Economic Studies.

After a number of recent purchasing managers’ surveys had warned of a big drop in business sentiment due to disruptions in the wake of protests by the “yellow vests”, the consensus among economists was that the gauge would drop to 103.

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The aggregate business confidence index slipped to 102, from 105 in November. The main hit came from a seven point drop in the retail sentiment index, in line with expectations following a number of violent protests in main urban centres including Paris.

In November, Black Friday sales had also failed to lift consumer spending, which declined by 0.3 per cent compared to spending in October, according to Insee.

By comparison, the same period last year saw French consumer spending grow 2.6 per cent compared to October 2017.

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The drop was even more pronounced when taking into account that households’ budgets were boosted in October by a backloaded tax cut. The same month also saw energy inflation fall in response to a drop in oil prices.

Lower spending on new cars and household durable goods were the biggest drivers of the decline. Spending on textiles dipped marginally, while expenditure on food also fell.

Looking more broadly at the economy in the third quarter, new data released on Friday showed gross domestic product for the eurozone’s second-largest economy increased 0.3 per cent from the end of June. That missed expectations of economists polled by Reuters that the country’s pace of economic growth would pick up to 0.4 per cent.

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Pantheon Macroeconomics’ economist Claus Vistesen said the slow finish to the year put fourth quarter headline GDP under threat.

He added:

We are loath to put too much emphasis on this, especially because we see a lot of upside risks to growth in the first half of the year.

But the more we look at the numbers — in France and elsewhere in the eurozone — the more it seems that full-year growth for 2019 is set to become completely mangled by the spectacular reversal in headline growth this year, across all the major eurozone economies, and the simple fact that an acceleration in the run-rate looks unlikely based on any of the main leading indicators.

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