PARIS (Reuters) - The French economy eked out 0.3 percent growth in the third quarter, the highest reading in over a year but not enough to lift the euro zone's second-largest economy out of its gloom nor fight rampant unemployment.
The reading was slightly above forecasts but was mostly lifted by public spending and inventories changes, while investment, trade and real estate kept weighing on the economy. Consumer spending grew only marginally for the second quarter in a row.
"Domestic demand beyond public spending is null... We won't have a robust and lasting growth with that," Natixis Asset Management chief economist Philippe Waechter said.
The third quarter data came alongside a downward revision of the second quarter's performance, from flat to a slight contraction of 0.1 percent.
While exports grew by 0.5 percent, imports grew more than twice as fast, meaning trade overall had a negative impact on GDP.
"France's private consumption momentum – a historical growth driver – remains very modest while the investment slump has continued as expected, and (they) seem unlikely to reverse in positive territory as long as confidence stays at such low levels," said Barclays economist Francois Cabau.
Separately, another set of data by national statistics office INSEE showed non-farm payrolls in the private sector contracted by 0.2 percent in the third quarter after growing just 0.1 percent in the second quarter.
"Beyond the jolts from one quarter to the next, activity has somewhat taken off but remains too weak to create the jobs our country needs," Finance Minister Michel Sapin said in a statement, reiterating French calls for more action to boost growth and jobs in Europe.
Sapin welcomed the GDP data as a sign that it could reach its new target of 0.4 percent growth for the whole year. That is less than half its initial forecast and France has said it would miss a pledge to bring its public deficit down to 3 percent of GDP next year because of weak growth.
(Reporting by Ingrid Melander and Yann Le Guernigou; Editing by Natalie Huet/Jeremy Gaunt)