French consumers cut back on spending more than expected in May, according to new data today.
National statistics office INSEE said household spending on manufactured goods fell 0.9 per cent from the previous month. That was more than the consensus forecast of a 0.5 per cent drop, with purchases of durable household goods down 4.0 per cent.
The report fanned speculation the government will be forced to cut its official 2005 growth forecast of 2.0 to 2.5 per cent, particularly since domestic consumption has so far been the main driving force for economic expansion.
French households' concern about unemployment, which is at its highest in more than five years, has been weighing on their confidence and willingness to spend.
The latest data underscores this trend and will be a fresh blow for the government of French Prime Minister Dominique de Villepin, which is hoping to revive consumer confidence and inject new dynamism into slowing economic activity.