French households raise spending in November
However analysts say the increase does not spell end of economic woes.
PARIS – French household consumption of manufactured goods rallied last month after a slump in October, official data showed Tuesday but analysts said the figures, while welcome, did little to dispel economic gloom.
Consumption of manufactured products rose by 0.3 percent in November after falling 0.5 percent in October on a revised basis, the adjusted data showed.
Consumption of manufactured goods accounts for about a quarter of all French household consumption, which is the main driving force behind growth of the French economy.
The data from the official statistics institute INSEE showed that consumption of these products from November 2007 to November 2008 rose by 1.0 percent.
Retail spending rose by 0.6 percent in November after a fall of 0.5 percent in October.
Spending on durable goods rose by 0.6 percent after a fall of 0.6 percent in October despite a further fall of purchases of autos which dropped by 2.1 percent after a fall of 1.5 percent in October.
At Asteres consultants, economist Nicolas Bouzou said "it is difficult to draw positive conclusions" from the figures because they were driven largely by sales of leisure electronic goods. But sales of autos had fallen by 2.1 percent and of textiles and leather goods by 1.0 percent.
"Spending on manufactured products has not increased since the beginning of the year," he said, noting that in volume terms it had fallen slightly from the level in December last year.
Any suggestion that spending was holding up because inflation had fallen sharply did not stand up, he said, because it had occurred too recently for it to affect household behaviour and because it was matched by the negative effects of a rise of unemployment.
Spending on manufactured goods would probably fall at the beginning of next year, he said.
The main drivers of household consumption, such as employment, the property market and consumer credit were heading down "so there is no recovery to be seen from that direction," he said.
At Xerfi, economist Alexander Law said "it is a first small Christmas present for the French economy" and was much to be welcomed since "at the height of the storm," consumption had not slumped even though all other aspects of the economy were suffering.
In contrast with Germany, "France will get out of the crisis only through household spending holding up" and it was "doubtless too late to avoid a setback for gross domestic product in the fourth quarter."
But "the beginning of 2009 will be complicated, mainly because of the worsening situation on the labour market."
At BNP Paribas bank, Frederique Cerisier said that the recovery of household spending compensated partly for a fall the previous month but "overall, the outlook for private consumption remains mediocre".
[AFP / Expatica]