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18 May 2024

Consumer confidence in France falls in December

Growth in the French economy in the third quarter. (REUTERS)

By Reuters

French consumer confidence fell unexpectedly in December, data released yesterday showed, adding to concerns over the strength of demand in the euro zone's second-largest economy as unemployment mounts.

The monthly indicator of consumer confidence from national statistics office Insee fell for the first time in four months in December to -31 from an unrevised -30 in November.

Analysts had been expecting the confidence index to improve slightly over the month to -29.

"From the point of view of households and consumers, the economy is still very fragile," said Bruno Cavalier, economist at Paris private bank Oddo et Cie.

"The improvements we have seen in some sectors such as manufacturing or in the stock market rally last year are one thing but the economy that people experience directly is quite another," he said. The French economy grew 0.3 per cent in the third quarter of 2009 and Insee expects gross domestic product to expand by 0.4 per cent in the fourth quarter, fuelled by household spending.

Economy Minister Christine Lagarde said yesterday she hoped the government would be able to revise its 2010 growth forecast to one per cent from 0.75 per cent.

But she warned that the wave of job destruction seen over the past 18 months would not ease until the second half of 2010, underlining concerns that demand may wane in coming months, notably when government subsidies to boost consumption end.

Even as France pulls itself out of recession, recent data on consumer spending showed households rushed to take advantage of a car scrappage scheme in November before its withdrawal, but cut back on other items, pushing consumption down 0.1 per cent.

The weaker confidence data did not augur well for retailers hoping for a bumper winter sales season kicking off today but Lagarde said initial signs from regions which had already started their sales were more positive.

Yesterday's confidence data showed fears over future job losses eased slightly in December to 61 from 62 previously, but still remained well above their long-term average of 32.

At the same time, householders said they were more worried about their future finances.


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