France Consumer Confidence May 2008

Consumer confidence in France dropped to a record low in May after fuel, gasoline and food costs soared. The French consumer sentiment index fell to minus 41, the lowest level since the index was introduced in 1987, from a revised minus 38 in April, Insee, the Paris-based national statistics office, said today.



France's inflation rate fell to 3.4 percent in April after reaching 3.5 percent in March, the highest in at least 12 years. As a result, consumer spending on manufactured goods fell 0.8 percent in April from March, the third drop in four months, Insee reported last week.

France Business Confidence May 2008

French business confidence declined to the weakest in more than two years in May as rising energy prices and strong euro hurt the outlook for corporate sales and profits. An index of sentiment among 4,000 manufacturers slid to 102 from 106 in April, according to Insee, the Paris-based national statistics office. That was the lowest since December 2005.




Growth in the euro area's second-largest economy has been slowing recently as inflation hurts consumer spending at the same time as exporters feel the pinch of slowing orders from the U.S., a euro worth around $1.55 and record oil prices.

A sub-index of how executives see the economic outlook fell to minus 15 from minus 9, while a gauge of orders dropped to minus 11 from minus 4 and a measure of foreign orders declined to minus 7 from 3.

The 18 percent gain in the euro against the dollar over the past year will continue to put pressure on exports as rising inflation weighs on consumer demand in local markets. Consumer prices rose 3.4 percent in France this month from a year ago. Higher energy costs are pushing up inflation, with the price of oil reaching a record $135.09 a barrel on May 22.

The French government expects growth of between 1.7 percent and 2 percent this year, compared with 1.9 percent last year.

French Consumer Spending April 2008

French consumer spending on manufactured goods unexpectedly fell for a second month in April as shoppers scaled back purchases of cars and clothes.

Such spending, which accounts for about 15 percent of the economy, dropped 0.8 percent, after a revised decline of 1 percent in March, Insee, the Paris-based national statistics office, said today. Economists expected a 0.5 percent increase, the median of 22 estimates in a Bloomberg survey showed. Spending rose 0.4 percent from a year earlier. Inflation near the fastest in 12 years has pushed consumers' confidence to a record low, slowed spending growth, and hurt President Nicolas Sarkozy's popularity. Households' purchasing power may decrease further in coming months as economic expansion loses momentum.

France GDP Q1 2008

France's economic growth accelerated more than economists forecast in the first quarter as stronger exports more than offset weaker consumer spending. Gross domestic product in the euro region's second-largest economy expanded 0.6 percent from the previous quarter, when it grew 0.3 percent, national statistics office Insee said today in Paris. On a year on year basis the economy grew by 2.2% when compared with the first quarter of 2007.



In the quarter, exports rose 3.1 percent, after slipping 0.2 percent in the last three months of 2007. Imports climbed 1.9 percent, meaning that net trade added 0.3 percentage point to GDP growth in the period, Insee said.

Consumer spending growth slowed to 0.1 percent from 0.6 percent in the fourth quarter. Stocks were unchanged after a drop the preceding quarter. Corporate investment climbed 1.8 percent, after 1.2 percent in the last quarter.



Fourth-quarter growth was revised lower from the previous estimate of 0.4 percent. From a year earlier, the economy expanded by 2.2 percent in the first quarter, Insee said.

Separately, the institute said the economy grew 2.2 percent in 2007, the same pace as 2006, as corporate investment rose and households gained purchasing power and increased their savings. Adjusted for working days, GDP expanded 2.1 percent in 2007, down from 2.4 percent in 2006.

Hurt by deteriorating finances of local governments, the country's total public deficit increased by 7.7 billion euros to 50.3 billion euros, representing 2.7 percent of GDP in 2007 from 2.4 percent in 2006. Public debt amounted to 1.21 trillion euros at the end of last year, amounting to 63.9 percent of GDP, up from 63.6 percent at the end of 2006.

Public spending amounted to 52.4 percent of GDP in 2007, down from 52.7 percent the previous year. The tax burden fell to 43.3 percent of GDP in 2007 from 43.9 percent in 2006.

France Inflation April 2008

France's inflation rate stayed close to a 12-year high in April, sustained by rising energy and food costs. Consumer prices climbed an annual 3.4 percent, down from 3.5 percent in March, based on European Union-harmonized methods, Insee, the national statistics bureau, said today in Paris. The March inflation rate was the highest since 1996, when Insee began reporting the data. Prices increased 0.4 percent from March.

French Industrial Output March 2008

Industrial production in France fell for the first time in four months in March as global demand waned and domestic spending lost momentum. Production at factories and utilities, which accounts for 15 percent of the economy, slipped 0.8 percent from February, when it gained a revised 0.5 percent, the national statistics bureau, Insee, said today in Paris.



The decline in French output in March limited the increase for industrial production in the first quarter to 0.3 percent, Insee said.

French manufacturing, which excludes energy and food output, fell 1.5 percent on the month, Insee said today. From a year earlier, industrial output rose 1 percent and manufacturing increased 0.4 percent.

The decline was led by a 2.9 percent slump in car output and a 3.3 percent decline in clothes and leather goods, the data showed.

Manufacturers, who are facing rising production costs from the near doubling in crude oil prices in the past year, are also feeling the pinch of a euro worth almost $1.55. France's trade deficit widened to a record in March, hurt by a slump in exports, and consumer spending on manufactured goods slipped 1.7 percent in the month.

France Services PMI April 2008

Eurozone service sector growth held steady at a slightly slower pace in April as faster growth in Germany contrasted with weakness elsewhere; Spain in particular stood out and reported record job cuts.

The RBS/NTC Eurozone Services Business Activity Index rose from 51.6 in March to 52.0 in April, coming in slightly above the earlier flash estimate of 51.8. However, the rise still indicated only a very modest acceleration in growth, with the rate of increase remaining weak by historical standards of the survey (and only slightly above the average reading for Q1, which had been the weakest quarter since Q2 2003).


France

France's service sector grew at its weakest pace in nearly five years in April as an economic slowdown stemmed the flow of new business, a NTC/CDAF survey showed on Tuesday. Their Purchasing Managers' Index of the French services sector dropped sharply to 52.8, its lowest since August 2003, from 57.3 in March.

"The subdued rise in activity during the latest month marked a significant turnaround from the resilience seen in the first quarter of the year and suggests that deteriorating economic conditions may finally be taking their toll on France's dominant service sector," NTC said in a statement.

New business growth slowed to its weakest since September 2004 as firms reported a general softening in demand and a dearth of client inquiries.

"It looks like consumers have reined in spending on services quite significantly," said Chris Williamson, chief economist at data compiler NTC.

Slowing growth is also jeopardising President Nicolas Sarkozy's goal of cutting unemployment, and the NTC/CDAF survey showed firms in the service sector are already responding to the weaker economic climate by scaling back hiring.
In a sign that inflation pressures are persisting, the survey showed service sector firms continued to raise the prices they charged as their input costs kept increasing.

EU Economic Sentiment Indicator April 2008

The European Commission’s eurozone “economic sentiment” index which fell sharply from 99.6 in March to 97.1 in April – the lowest level since August 2005. With the indicator regarded as good guide to growth trends, the unexpectedly steep decline pointed to a marked deceleration in economic activity.




Still, eurozone countries show varying performances. Economic sentiment in Spain, which is at risk of a serious house price correction, has fallen to the lowest level since late 1993. But sentiment in Germany and France remains relatively robust – falling to the lowest levels since February 2006 and December 2005 respectively.




As can be seen from the above chart, Italy's economy continues - like Venice - to sink steadily, while the two eurozone economies which had the strongest housing booms head steadilyoff the cliff, with Spain having poll position, and by quite a long margin