(Adds analyst comment)
By Crispian Balmer
PARIS, March 26 (Reuters) - French consumer confidence remained mired in gloom in March, with deep pessimism over the future standard of living overshadowing improved views on inflation, national statistics office INSEE said on Thursday.
The data tallies with a slew of recent indicators that all paint a grim picture for the euro zone's second largest economy, with unemployment soaring and output in sharp decline.
Consumer morale registered a reading of -43 this month, unchanged from the February level and better than a consensus forecast of -44, INSEE said.
It was the 11th consecutive month the figure has come in below -40, with the historic low of -48 set last July.
"Consumer confidence, as expected, has stabilised at a very, very low level," said Alexander Law, an analyst with Paris researchers XERFI.
"My worry is that if this confidence indicator stays between -40 and -50 for the next six months, that would entail less consumer spending and that has really been the driver of French economic growth for the past decade," he said.
INSEE said French households were increasingly pessimistic about the outlook for their future standard of living, with a record low reading of -61, down from -59 in February.
However, shoppers' perception of recent inflation fell to -5 from -1, its lowest reading since June 2007 and reflecting the recent fall in the consumer price index, which declined 0.3 percent in the three months to February.
There was also an improvement in perceptions about future purchasing prospects, which climbed 4 points to -29.
"Households no longer fear inflation, but they are very pessimistic about the labour market so that weighs very heavily on morale," said Jean-Louis Mourier, analyst at Aurel-BCG.
France's headline jobless total jumped 79,900 in February to 2,384,800, according to data released on Wednesday, increasing pressure on President Nicolas Sarkozy to help struggling households and stem a wave of plant closures.
Up to 3 million protesters took to the streets of France last week to denounce the government's handling of the economic crisis and to demand more help for consumers.
Other data released this week showed consumer spending on manufactured goods plunged 2.0 percent month-on-month in February, while business confidence stuck at a record low in March as bosses fretted about empty order books.
The government has said it believes the economy will contract by 1.5 percent this year, but economists say this forecast is looking increasingly rosy.
"If we lose consumer spending, we could be reverting from a GDP path of -1.5 percent this year to -3 percent, so it's a serious concern. We are on the cusp of something extremely important," XERFI's Law said. (Additional reporting by Estelle Shirbon, editing by Mike Peacock/Victoria Main)