France Consumer Confidence April 2008

French consumer confidence fell to its lowest in more than two decades in April as households became gloomier about the outlook for living standards.
More bad news for the euro zone's second biggest economy came in signs that the housing market was cooling rapidly and predictions that industrial demand would slow in the second quarter against a backdrop of worsening export competitiveness.

A composite indicator of consumer confidence in France slipped to -37 in April from -36 in March, according to a monthly survey carried out by statistics office Insee.


The indicator represents the balance in percentage points between consumers having experienced, or expecting, a rise in their living standard and those seeing a decline.

The indicator on consumers' past personal financial situation was -29 in April, up from -30 in March, while the outlook for personal finances was -16, down from -14 a month earlier.

Past French standard of living was -69, up from -71 in March, while the outlook for the French standard of living stood at -43, down from -40 a month earlier.

The Insee indicator showing the inclination to buy consumer goods was steady at -28.

Accelerating inflation is fanning concern about how far incomes will go, growth is slowing, public sector jobs are being cut, and the government is seeking to extend the number of years people work before they earn a full pension.

"France is important for the euro zone at this stage since the fact that it has held up well has prevented the euro zone from slowing down more than it has. Signs that French economic activity is slowing or improving are therefore important and will affect the direction the euro zone economy takes."
Jacques Cailloux, chief euro zone economist at RBS in London.

This slowdown was underscored by the latest Housing Ministry data which showed the number of housing starts fell 9.9 percent in the three months to end March compared with a year earlier. Economists said that while the series had been volatile in recent times, it showed a clear slowdown in the housing market.

"The data may be overstating things but house price and lending data are suggesting the housing market is past its peak and are pointing to a soft landing," Cailloux at RBS said.