French consumer spending rose 0.2% in September, according to statistics office INSEE, confounding analysts’ projections of a 0.9% fall.
“I think the consensus forecast was much too pessimistic, probably because people were expecting a September 11 impact,” said Stephane Deo, an economist at UBS Warburg. “The information we were getting from companies was that the first weekend after the attacks was more or less normal.”
Buoyed by light inflation and tax cuts for workers on low pay, consumer spending soared 2.1% during the third quarter, compared with no growth whatsoever during Q2.
Tax cuts are predicted to help spending in coming months, but the future is not necessarily rosy. Consumer confidence, hit by a series of layoffs over the summer, is down, with September’s household confidence at its lowest since May 1998. The French government last week reduced its economic growth projection for 2001 from 2.3% to 2.1%, and warned its goal of 2.5% in 2002 would be difficult to meet.
News source: BBC Online Business News (UK)