French Consumer Spending Unexpectedly Rises, Helped by Cars
French consumer spending unexpectedly increased in April as government incentives boosted car sales and slowing inflation helped cushion the worst recession since World War II.
Spending on manufactured goods rose 0.7 percent from March, when it climbed a revised 0.6 percent, according to Paris-based national statistics office Insee. Economists surveyed by Bloomberg expected a 0.3 percent drop in April, according to the median of 22 forecasts.
Consumer spending may wane in coming months as the recession swells the ranks of jobseekers and the government predicts a further increase as companies from Air France-KLM Group to Caterpillar Inc. cut jobs in France. President Nicolas Sarkozy, his approval rating near a record low, has pledged 2.6 billion euros ($3.6 billion) in tax breaks for low-income households and new benefits for jobseekers and the disabled.
“The deterioration of the job market should start weighing on consumers,” Laurence Boone, chief French economist at Barclays Capital in Paris, said before the report. “Some elements should mitigate it,” such as the tax measures for the least well off, he said.
The inflation rate in France, the euro region’s second- largest economy, fell to the lowest in at least 13 years in April. The government offered a 1,000-euro car-scrapping incentive in December for buyers who junk old vehicles. Car sales climbed 3.7 percent last month, today’s report showed.
Economic Slump
The number of jobseekers surged to 2 saving account payday loan.45 million in March, the highest in almost three months, and the government predicts a further increase as employers fire workers to survive the economic slump. France’s economy entered a recession in the third quarter and shrank 1.5 percent and 1.2 percent in the following two quarters, prompting the government last week to predict gross domestic product will fall 3 percent this year.
PPR SA Chief Executive Officer Francois-Henri Pinault this month declined to give a forecast for the French retailer’s 2009 earnings, saying it was too hard to predict the outlook for Gucci fashions and Fnac music stores. Last month the company said that all its businesses were hurt by waning demand in the first quarter.
“Visibility is low,” Pinault told the company’s annual shareholders meeting on May 7.
Insee said purchases of clothes and leather goods rose 0.3 percent in April from March, when they climbed 3.6 percent, and home appliances and furniture increased 0.8 percent last month. From a year earlier, consumer spending increased 0.6 percent. The March month-on-month figure was revised from an earlier estimate of a 1.1 percent gain.
Household purchases of manufactured goods make up a quarter of consumer spending, which in turns accounts for about 15 percent of the economy.
Filed under: finance by Fred