France avoids recession as economy returns to growth; UK house prices drop – business live

Introduction: France’s economy avoids recession with return to growth

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

It’s a massive day for GDP data, as growth figures from across the Eurozone – and then North America – are released through the day.

They’ll give us an insight into how the world economy fared in the first quarter of this year, a time dominated by Donald Trump’s second presidency, and the trade war that sent ripples around the globe.

And France has got us up and running, with new data showing that its economy has avoided falling into recession.

French GDP rose by 0.1% in January-March, statistics body INSEE reports. That follows a 0.1% contraction in October-December 2024, and means France has avoided shrinking for two quarters in a row (a technical recession).

But, such growth as there was came from a rise in inventories, as companies stocked up – perhaps in preparation for new tariffs. That added 0.5% to French GDP.

INSEE reports that final domestic demand and household consumption both stalled.

Investment, or “gross fixed capital formation”, shrank by 0.2%.

Foreign trade kept contributing negatively to GDP growth in the first quarter (-0.4 points after -0.1 points): exports fell sharply this quarter (-0.7% after +0.2%), while imports rose again (+0.4% after +0.5%).

France GDP Growth Rate QoQ Prel was reported at 0.1% in Q1 from -0.1% in the previous period. It was expected at 0.2%.

France’s GDP growth returns to positive territory but falls short of expectations, indicating a modest recovery. Potential downward pressure on the euro, but…

— Bleeding Edge Macro (@BEMacroPublic) April 30, 2025

We’ll hear from Germany, Italy, and the full eurozone this morning.

This afternoon, investors will be bracing for the latest US GDP report which will show how America’s economy fared under Donald Trump, as recession fears rise….

The agenda

6.30am BST: France’s GDP report for Q1 2014
7am BST: Nationwide’s UK house price index for April
9am BST: Germany’s GDP report for Q1 2024
9am BST: Italy’s GDP report for Q1 2024
10am BST: Eurozone GDP report for Q1 2024
12pm BST: Mexico’s GDP report for Q1 2024
1.30pm BST: US GDP report for Q1 2024
1.30pm BST: Canada’s GDP report for February

Key events

Economists are concerned that France’s economy remains weak, after it posted modest growth of 0.1% in the last quarter this morning.

Bloomberg Economics says:

“Business surveys suggest that this rebound in activity is already losing some momentum going into the second quarter. The services sector is still lagging while the manufacturing sector appears to be bracing for tariffs.

We anticipate sluggish GDP growth of 0.1% in the second quarter, as tighter financial conditions and the impact of tariffs weigh on investment. Overall, our baseline forecast is for 2025 output growth is 0.5%.”

Fund manager Mario Cavaggioni agrees that activity remains weak:

France GDP Q1 q/q +0.1% (est +0.1%, last -0.1%)
France GDP Q1 y/y +0.8% (est +0.7%, last +0.8% from +0.6%)

Slightly positive surprise for me, as my model penciled a 0%/-0.1% q/q, but the whole picture confirms that activity remains weak…

— Mario Cavaggioni (@CavaggioniMario) April 30, 2025

Housebuilder Taylor Wimpey has reported that the spring selling season “has progressed as expected”, despite the macroeconomic volatility triggered by the US trade war.

The company told shareholders that some customers are facing “ongoing affordability challenges”, particularly in the south of England (where prices are higher), but that it is still seeing good quality customer interest.

Over the last year, Taylor Wimpey’s sales rate has run at 0.77 per outlet per week, up from 0.74 a year earlier, with a cancellation rate of 16% (up from 13%).

Jennie Daly, chief executive, says:

“The Spring selling season has progressed in line with expectations, with good levels of customer demand reflected in our sales rate. As a result, we are today reiterating our guidance for full year UK completions excluding JVs [joint ventures] and Group operating profit.

Notwithstanding the wider macroeconomic backdrop, affordability is improving with lenders remaining committed to the housing market, albeit first time buyers continue to experience some challenges.

According to @AskNationwide post stamp duty holiday, UK house price growth slowed to 3.4%, from 3.9%. Month on month, after taking account of seasonal effects, house prices fell by 0.6% to £270,752 as the market readjusted to the new norm. Moving forward the market is expected to… pic.twitter.com/60pVGq9qhe

— Emma Fildes (@emmafildes) April 30, 2025

UK house prices dipped in April

Average UK house prices fell this month, lender Nationwide reports, after the rush to avoid an increase in stamp duty faded.

According to Nationwide, house prices fell by 0.6% in April, with the average price dropping to £270,752 from £271,316 in March.

Annual house price inflation fell to 3.4%, from 3.9% in March.

A chart showing average UK house prices Photograph: Nationwide

Robert Gardner, Nationwide’s Chief Economist, says this “softening” of price growth was due to the changes to stamp duty at the start of the month, which lowered the threshold for paying the tax.

Gardner adds:

Early indications suggest there was a significant jump in transactions in March, with buyers bringing forward their purchases to avoid additional tax obligations.

“The market is likely to remain a little soft in the coming months, following the pattern typically observed following the end of stamp duty holidays. Nevertheless, activity is likely to pick up steadily as summer progresses, despite wider economic uncertainties in the global economy, since underlying conditions for potential home buyers in the UK remain supportive.

China’s manufacturing activity shrinks as US tariffs bite

Factory activity across China contracted at the fastest pace in 16 months in April, a factory survey shows today, highlighting the economic impact from US President Donald Trump’s trade war.

China’s official manufacturing purchasing managers’ index has dropped to 49, the weakest level since December 2023, down from 50.5 in March.

Any reading below 50 indicates that the sector contracted.

This indicates that the flurry of tit-for-tat tariffs imposed by Washington and Beijing this month have hurt manufacturers.

The Chinese PMI fell more than expected to 49 from 50.5. The indicators offer an alarming first official look at the health of China’s economy.

A significant economic slowdown this quarte that could trigger more stimulus. pic.twitter.com/bhicgVVTML

— Umar Farooq, CFA (@UmarFarooq042) April 30, 2025

Zichun Huang, China economist at Capital Economics, explains:

“The sharp drop in the PMIs likely overstates the impact of tariffs due to negative sentiment effects, but it still suggests that China’s economy is coming under pressure as external demand cools.”

“Although the government is stepping up fiscal support, this is unlikely to fully offset the drag, and we expect the economy to expand just 3.5% this year.”