UPDATE 2-Fastest growth since 2011 gives France's Macron reform tailwind

* French economy grew 0.5 pct q/q in Q3, 2.2 pct y/y

* Q4 2016 and Q2 2017 both revised up to 0.6 pct

* Growth outlook a positive for Macron reform agenda (Adds analyst comments, details, background)

PARIS, Oct 31 (Reuters) - The French economy expanded at its fastest pace since 2011 in the third quarter, boosted by an acceleration in consumer spending and robust investment, giving President Emmanuel Macron momentum to push through his reform agenda.

Upward revisions to growth in previous quarters provided more good news for Macron. His government's annual growth target of 1.7 percent now looks likely to be surpassed, making his plan to cut France's budget deficit easier to achieve.

Lifted by a broad pick-up in economic growth among its euro zone trading partners, France is also benefiting from rock-bottom interest rates and cuts in companies' payroll charges brought in by Macron's predecessor Francois Hollande.

"Macron has luck on his side because he is benefiting from an improved global economy over the last three years as well as the few reforms to increase French competitiveness pushed through by the Hollande government," said SaxoBank economist Christopher Dembik.

The pick-up comes after five years of sluggish growth that left the unemployment rate close to 10 percent. Macron has vowed to reduce joblessness to 7 percent by loosening labour laws, cutting taxes further and investing in training.

"It's the right moment to push through the reforms," Helene Baudchon of BNP Paribas said.


The stronger growth figures should help boost tax receipts and help Macron bring the deficit below the EU-mandated 3 percent threshold this year, providing reassurance to Brussels and EU paymaster Germany.

It should also give the 39-year-old president more room for manoeuvre on public spending, after cuts made to a widely-enjoyed housing allowance and other welfare measures to avoid breaching the deficit limit hurt his popularity.

Having faced down street protests and signed into law labour reforms which make hiring and firing easier, Macron is now in talks with unions over revamping a debt-laden unemployment insurance scheme and a dysfunctional training system.

SaxoBank's Dembik said the reforms were necessary to ensure the growth spurt was not cut short when the European Central Bank starts tightening monetary policy and interest rates return to more normal levels.

The 0.5 percent increase in GDP in the July to September period, in line with expectations, meant the economy grew 2.2 percent over the year, a pace not seen in six years.

That was better than the 1.5 percent pace registered in Britain, but below the 2.5 percent rate of the wider euro zone.

With upward revisions to growth in the second quarter of this year and the fourth quarter of last year, both by 0.1 percentage point to 0.6 percent, the economy's carry-over, the annual performance if growth was at zero in the final quarter, stood at 1.7 percent.

Statistics office INSEE said consumer spending rose by 0.5 percent in the third quarter, after a 0.3 percent rise in the previous quarter, while investment increased by 0.8 percent, slightly less than the second quarter's 1.0 percent rise.

Trade shaved 0.6 points off GDP, however, with a 2.5 percent pick up in imports outpacing a 0.7 percent increase in exports.

A build-up in inventories contributed 0.5 points to GDP.

Inventories and trade have tended to move inversely in recent years, mainly because of the aerospace sector, with inventories building up when France imports parts from other EU countries to assemble Airbus aircraft before selling them.

For a graphic of GDP by contributions: http://reut.rs/2oQ8Pxu

For further details from INSEE: http://www.insee.fr/en/themes/info-rapide.asp?id=26 (Reporting by Michel Rose; Additional reporting by Myriam Rivet; Editing by Richard Lough and Catherine Evans)