French consumer spending rose slightly in December compared to November as car sales soared in the last month of a scrappage scheme, data showed today, with economists forecasting a drop-off in early 2011.
Insee, France's national statistics office, said spending had risen by 0.6 per cent in December compared to the previous month. Car sales spiked 8.6 per cent in the last month of a scrappage scheme that subsidises purchases.
While car sales pulled up the overall figure, economists said that a slight weakening in sales of household equipment, textiles and other goods showed that labour market conditions and other factors could drag on spending in early 2011.
The strong car sales figures masked a fragile underlying economic situation as France struggles to invigorate its labour market, still saddled with joblessness of over 9 per cent. Total joblessness rose 0.8 per cent in November from the previous month, Insee said in December.
Economists said that retail sales were likely to drop abruptly in January as rising prices for food and energy compete for French consumers' shopping money, while household confidence was also likely to weigh at the start of 2011.
The 0.6 per cent rise in overall sales on manufactured goods came on the back of a strong rise in November, also driven by last-minute scrappage scheme purchases, which was revised down slightly to a rise 2.7 per cent today.
Excluding car sales in December, consumer spending dropped by 0.7 per cent, more or less stable for the quarter.
Reuters