PARIS, March 2 (AFP) – French consumer confidence remained weak in February, data released Tuesday showed, suggesting that economic recovery will be driven more by foreign demand than domestic household spending.
The French statistics institute Insee said Tuesday that composite consumer confidence indicator had fallen to negative 23 in February from negative 22 in January.
The indicator represents the balance in percentage points between consumers having experienced, or expecting, a rise in their living standard and those seeing a decline.
“Contrary to business leaders who have seen an improvement in the international context, households remain depressed because of numerous persisting domestic problems firstly, unemployment, which they do not see falling in the coming months,” Credit Commercial de France analyst Nicolas Claquin said.
Exane economist Emmanuel Ferry said the decline in consumer confidence in February reflected concerns about the country’s weak labour market.
“The data reflects growing pessimism among French households and prospects remain rather negative this year,” Ferry said, noting it shows continued uncertainty about the country’s unemployment and a rapid deterioration in public spending.
Ferry said he forecasts gross domestic product growth of around 0.9 percent in 2004, well below market forecasts for growth of around 1.7 percent. The government’s official forecast for GDP growth this year is 1.7 percent.
Stephane Deo of UBS Warburg said household confidence remains “desperately” weak in France, noting the level has remained almost unchanged since early 2003.
“The main driver of confidence is, by far, the labour market,” Deo said.Deo said he did not expect a recovery in consumer confidence until the second half of this year.
“Households are not expecting any meaningful improvement in the labour market,” Deo said, noting the component of the consumer confidence data related to expectations of future employment fell back to its end-2003 level.
Subject: France news