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French growth brisker than first thought in first quarter

Construction cranes are seen on the building site of a new apartment housing complex in Bordeaux, Southwestern France, April 13, 2016. REUTERS/Regis Duvignau

PARIS (Reuters) - The French economy grew a stronger-then-expected 0.6 percent in the first quarter, official data showed on Monday, driven by a surge in consumer spending and a pick-up in business investment.

The brisker growth figures, which augured well for the government’s 1.5 percent target for the full year, were the latest positive developments for the euro zone’s second-largest economy, where unemployment has finally started to decline and consumers are more optimistic despite strikes and protests.

A poll of 15 analysts surveyed by Reuters had forecast French gross domestic product (GDP) to remain at the 0.5 percent that INSEE had initially reported in its preliminary estimate. With the revised figure, it was only the second time in three years that growth came in above 0.5 percent in France.

Growth in the quarter to end-March was driven by a 1.0 percent surge in consumer spending, with INSEE revising sharply upward its March figure in a separate release, and a 1.6 percent increase in investment.

The strong increase in domestic demand offset a negative contribution from international trade, which shaved 0.2 percentage points off first-quarter GDP, although that was less than the 0.6 points it subtracted in the fourth quarter.

With 1.1 percent of growth carry-over at the end of the first quarter, analysts say President Francois Hollande’s 1.5 percent target for the full-year seems all but assured, barring any nasty surprise in the remainder of the year.

For a graphic of GDP by contributions:

For further details from INSEE: here

Reporting by Michel Rose; Editing by Tom Heneghan