French consumer confidence falls again in May: official data

27th May 2010, Comments 0 comments

French household confidence fell in May, extending a slump that set in at the beginning of the year, the official statistics office INSEE reported on Thursday.

This indicator is particularly closely watched in France because household consumption is a key driver of growth in the economy.

The confidence reading for May fell by one point from April to minus 38, INSEE said.

The figure measures the view taken by households of the economic situation. It has fallen steadily since the beginning of the year, shedding eight points since January, INSEE said.

Analysts at BNP Paribas bank commented that the indicator was now at the lowest point for a year and significantly below the long-term average.

This fall of confidence was in line with a sharp fall in household spending on manufactured goods, they said

They added that the INSEE data showed the main factors behind the fall in confidence were increased pessimism about consumers' personal financial situations and living standards in France. They were also increasingly worried about the trend of prices.

Economists are watching signals about confidence and spending because of concerns that tough measures to reduce public overspending announced in many European countries might, cumulatively, depress consumption so much that the economic recovery is compromised.

© 2010 AFP

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