French consumer spending rose in May

25th June 2008, Comments 0 comments

The 2.0 percent increment in consumer spending on manufacture goods is the biggest monthly increase since January 2004.

25 June 2008

PARIS - French consumer spending on manufactured goods jumped by 2.0 percent in May, the biggest monthly increase since January 2004, official data showed on Tuesday, countering weak recent figures.

But analysts warned that the performance was unlikely to sustain French economic growth in the coming months.

Spending on manufactured goods declined 0.9 percent in April and 1.0 percent in March.

On a 12-month basis, spending increased by 3.1 percent, the statistics agency INSEE said, adding that the data had been corrected for seasonal variations.

Spending on manufactured goods represents about a quarter of total spending but is considered a good indicator of the general trend.

Consumer spending is watched closely in France because in recent years it has been the main factor supporting growth.

At Global Equities, economist Marc Touati commented: "The rally in May merely corrects past sluggishness."

One notable element of the increase was sales of cars, which rose by 5.6 percent after a fall of 1.7 percent.

At Xerfi consultants, analyst Alexander Law said: "The French economy remains in a state that is weaker than fragile. The situation will remain flat at least until the end of the third quarter."

He said that lasting recovery was unlikely before the end of 2008 or beginning of 2009.

[AFP / Expatica]

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