French consumer confidence weakens again: statistics

29th June 2010, Comments 0 comments

French household confidence weakened in June for the fifth month running, official figures showed on Tuesday, sending what analysts said was an ominous signal on the parlous state of critical consumer spending.

The national statistics body INSEE said its indicator of household sentiment fell a point compared with May to minus 39, representing a fall of nine points since January.

"It's one more warning sign for the French economy," said economist Alexander Law, who described French consumer spending as being "in great danger."

Law added that domestic consumption, which for nearly a decade has been responsible for 50 to 100 percent of French economic momentum, cannot be counted on this year.

The INSEE report showed that French consumers remain particularly anxious about unemployment, with more and more of them foreseeing a rise in joblessness in the near term.

"With inflation at a much higher level than a year ago, the removal of measures propping up purchasing power ... and more generally the prospect of tighter budgetary policies should continue to weigh on consumer confidence," warned Frederique Cerisier of BNP Paribas.

Economist Nicolas Bouzou of research group Asteres said the persistent erosion in consumer sentiment suggests that "the notion that you have to choose between growth and austerity is unsettling for households, and what's more, it's wrong."

"It would have been better to have presented austerity as a chance to strengthen public finances in order to improve prospects in the medium term."

© 2010 AFP

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