French households cut their spending by 1 per cent in February, figures showed today.
The fall in consumer spending, traditionally the main driver of growth in France, was greater than the mid-range forecast in a Reuters poll for a fall of 0.3 per cent month-on-month.
It was the biggest fall since a drop of 2.1 per cent in July last year.
The figures added to economic gloom in France after unemployment hit a five-year high and the government lowered its sights for growth
National statistics office INSEE revised up January's figure to show a month-on-month spending increase of 2.1 per cent compared to a previously reported rise of 1.5 per cent.
February consumer spending rose 3.3 per cent year-on-year, INSEE said. The weak February readout added to a deteriorating economic picture in France, the euro zone's second biggest economy after Germany, following a rise in the unemployment rate in January to to 10.1 per cent - the highest level in five years.
A raft of negative economic news has coincided with protests against the government's labour reforms and cost-cutting measures just as it is seeking to rally support for a 'Yes' vote in a referendum on the European constitution on May 29th.
Business morale slipped in February, and the Bank of France cut its growth forecast for the first quarter of 2005 last week in a survey showing weaker sentiment in the industrial sector.