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UPDATE 1-French consumer confidence edges higher in April

Published 04/28/2009, 04:30 AM
Updated 04/28/2009, 04:40 AM
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By Crispian Balmer

PARIS, April 28 (Reuters) - French consumer confidence improved marginally for the second successive month in April, despite growing fears over the jobs market, national statistics office INSEE said on Tuesday.

The figures suggest that public sentiment in the euro zone's second largest economy has pulled out of its nose dive, but analysts did not expect a rapid rebound.

"We should see this as a stabilisation at low levels rather than a genuine improvement," said Natacha Valla, an economist at Goldman Sachs in Paris.

Consumer morale registered a reading of -41 this month, up from -42 in March and better than a consensus forecast of -43. The March figure was previously given as -43.

The French April reading dovetailed with German data released on Monday which showed consumer sentiment in the euro zone's number one economy holding firm going into May..

Although the French number improved, it was nonetheless the 12th consecutive month the index has been below -40, hitting a historic low of -47 last July, showing the fragile state of sentiment during the economic slowdown.

France has been hit by a wave of recent job losses, with data released on Monday showing the headline unemployment total rising by 63,400 to 2,448,200 in March, a 2.7 percent increase from the previous month and a 22.1 percent year-on-year rise.

Unsurprisingly, the INSEE consumer measure of fears about future unemployment levels in the euro zone's second largest economy jumped to 82 in April from 78 in March.

FUTURE HOPES ON FINANCES

By contrast, expectations about future standards of living rose to -55 from -59 the previous month, while people's view of their future personal finances rose to -18 from -20.

In a sign that shoppers' morale was improving, INSEE reported last week that French consumer spending on manufactured goods rose by a stronger-than-expected 1.1 percent in March, helped by a rise in car and clothing sales.

But analysts warned that the economy was not about to stage a sudden recovery. Median forecasts from a recent Reuters poll of economists predicted gross domestic product would contract by 2.8 percent this year.

"The French economy is in recession, and in the first and second quarters of 2009 we're going to see a sharp contraction in employment," said Bruno Cavalier, an economist at Oddo.

"(This) justifies a high degree of caution and explains the sense of gloom in this consumer confidence survey."

In a separate quarterly survey released on Tuesday, INSEE said industry chiefs expected demand for French goods to continue to fall in the second quarter of 2009, but at a slower rate than in the first quarter.

The index measuring expected global demand for the manufacturing industry rose to -41 from -44 in the previous survey in January.

(Additional reporting by Tamora Vidaillet and Vicky Buffery; Editing by Ruth Pitchford)

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