Strong gain in French household spending

21st January 2005, Comments 0 comments

PARIS, Jan 21 (AFP) - French household spending on manufactured goods, a key economic driver, rose 0.2 percent in December from November, the statistics institute INSEE reported Friday, but economists warned the gains were unlikely to be sustained.

PARIS, Jan 21 (AFP) - French household spending on manufactured goods, a key economic driver, rose 0.2 percent in December from November, the statistics institute INSEE reported Friday, but economists warned the gains were unlikely to be sustained.

Household spending had risen 1.5 percent in November from October.

For the fourth quarter as a whole, spending on manufactured products rose 2.1 percent from the previous three months of 2004, when it had fallen by 0.5 percent.

Analysts said the fourth-quarter performance could be partially attributed to the automobile sector, a reliance on credit and government measures that eased restrictions on inheritance procedures and access to savings accounts.

But analysts expressed doubt that the strong trend in the fourth quarter would continue.

They said the figures could be showing that French consumers, anxious about a loss in purchasing power, are becoming more and more price conscious.

"Households do not hesitate to postpone purchases to wait for sales or to look for cheaper distribution channels," observed Nicolas Bouzou of the Xerfi research body.

"It's a trend that can be seen in food but also in tourism and consumer electronics. In other words the French are not buying less, they are buying cheaper."

Stephane Deo of the leading Swiss bank UBS pointed to a persistently weak labour market and argued therefore that "there is no reason to change our prediction of a less than dynamic recovery in consumption in the near term."

© AFP

Subject: French News

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