French exports grew by +EUR5.5bn in May and export gains reached about +EUR14.2bn in the first five months, roughly what we expect for the whole year. The sectors with the largest gains were aeronautics (+EUR4.8bn), followed by luxury (+EUR2.8bn), electronics (+EUR1.8bn) and pharmaceuticals (+EUR1.3bn). In terms of destinations, the U.S. surprised with the strongest gains so far this year (+EUR2.2bn) mainly explained by increasing aeronautics exports (+EUR2bn), followed by China and the UK (+EUR1.7bn each). However, the increase towards the UK was achieved in Q1 but has leveled off in Q2, before an expected reversal during fall due to renewed inventory building ahead of the next Brexit deadline. Eurozone destinations remain below average, with stagnating export growth to Germany, which is the main explanation for the overall decrease in car suppliers’ exports (-EUR0.5bn). Pharmaceuticals are an exception since 85% of the export gains were made in the Eurozone. Overall, we expect export gains to come to a sudden stop in H2 as a result of trade tensions: export orders plummeted suddenly in June for carmakers, chemicals, electronics and plastics.
