21 February 2002, 10:57  French consumer spending on manufactured goods weaker than expected

PARIS (MktNews) - French consumer spending on manufactured goods was weaker than nearly all analysts expected in January with a 0.4% monthly decline led by durable goods, according to seasonally and calendar-adjusted estimates released Thursday by the national statistics institute Insee. The disappointing results will raise doubts about the timing and strength of the expected recovery this spring, as consumer spending had helped cushion the economy against falling investment and foreign demand. Moreover, spending gains in December and November were trimmed by 0.1 percentage point each. Most analysts had forecast a further modest rise on the month, counting on higher incomes, households' cash reserves ahead of the euro changeover and abundant savings to offset the dampening effect of rising unemployment. However, the switch to euro prices and an uptick in inflation may have discouraged shoppers who usually increase outlays during January's retail discounts. Spending fell in all main categories in January, led by household durables (-1.5%) and autos (-0.8%) -- big-ticket purchases that are usually seen a measure of consumer confidence. The results confirm the sharp drop in buying-propensity signaled in Insee's January household survey. Excluding the auto sector (and medical products), spending was down 1.0% on the month and only 0.2% higher on the year in January. Textile and leather goods sales dipped 0.2% on the month, despite retail discounts on clothing goods, and were 1.4% lower on the year. Sales of other manufactured goods, which include cosmetics, drugs, car parts, jewelry, photo and sporting goods and account for over 40% of total spending, were flat on the month and 1.0% higher on the year.

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