FRENCH consumer confidence unexpectedly rose for the first time in more than a year in September, after falling fuel prices left people with more to spend on food and clothing.
A gauge of consumer sentiment rose to minus 44 from a record-low of minus 47 in July, the last month that was reported, the Paris-based national statistics office said in a statement yesterday.
Economists expected a reading of minus 47, according to the median of 20 forecasts in a Bloomberg News survey.
The price of oil has fallen by almost a third from its record in July. Still, crude remains at more than US$100 a barrel and is 33 percent higher than a year ago. At the same time, a deepening crisis in global financial markets may dim consumers' willingness to spend in coming months.
"Whether it's consumption, investment or exports, all the engines of French growth are stopped, or even in reverse," said Marc Touati, chief economist at Global Equities in Paris.
Earlier this month, Finance Minister Christine Lagarde pared her prediction for 2008 economic growth to around 1 percent from a previous forecast of at least 1.7 percent. Those forecasts may prove optimistic as the worst US housing slump since the Great Depression has pushed up the cost of credit globally and stirred up financial markets.
The French economy shrank 0.3 percent in the second quarter, the first contraction in more than five years, a separate report confirmed yesterday.
Household spending fell 0.1 percent, while exports declined 1.7 percent, from an increase of 2.6 percent in the first three months. The European Commission predicted on September 10 that the economy will stall in the third quarter, barely skirting a recession.
Zero growth
"It's possible France's GDP will shrink in the third quarter even zero growth would be good," Frederik Ducrozet, an economist at Credit Agricole SA in Paris, said on Bloomberg Television.
The gain in French confidence mirrored advances in Germany and Italy, as the lower oil price fueled optimism that record inflation rates would ease.
Confidence among consumers in Germany, Europe's biggest economy, rose for the first time in five months, a report showed on Thursday. Italian confidence rose from a 15-year low in August.
French President Nicolas Sarkozy said in a speech on the economy on Thursday that the turmoil in financial markets will be long-lasting.