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Posted: 12/23/2003 3:20:13 AM EDT
Uh oh!  Trouble in paradise.  Merry Christmas froggies  

French Consumer Spending Falls Most in Seven Years (Update3)

Dec. 23 (Bloomberg) -- French consumers cut spending on manufactured goods by 2.8 percent in November, the largest decline in seven years, as rising unemployment deterred purchases of clothing and cars.

Spending fell after increases in September and October, dragged down by a 9.2 percent drop in clothing sales and a 5.7 percent drop in purchases of cars and spare parts, Paris-based statistics office Insee said.

``Everyone's gloomy at the moment and people are very concerned about what comes out of their pocketbooks,'' Jackie Pellieux, chairman of Joueclub, a chain of 300 toy stores, said in a televised interview with Bloomberg News.

Growth in France, which makes up a fifth of the 12-nation euro economy, may lag the European average this year for the first time since 1997 as consumer confidence nears a six-year low and unemployment approaches 10 percent.

Department stores such as Pinault-Printemps-Redoute SA, Europe's largest non-food retailer, suffered a 12 percent drop in November sales, the Paris Chamber of Commerce said.

November's decline in consumer spending snapped increases of 3 percent in September and 0.9 percent in October, when shoppers returned to the stores they deserted during a heat wave in August. November spending was expected to drop 1.2 percent, according to the median forecast of 19 economists surveyed by Bloomberg News.

Clothes, Cars

``Shoppers are being extremely selective about what they buy and their demand is highly influenced by aggressive discounting, particularly at the moment for electronic goods,'' said Emmanuel Ferry, an economist at Paris brokerage Exane SA.

The euro was little changed, buying $1.2412 at 11:22 a.m. in Paris, close to yesterday's record of $1.2450. The yield on three- month interest rate futures for June delivery declined 1 basis point to 3.30 percent, the lowest since Oct. 2. A basis point is 0.01 percentage point.

The drop in consumer spending tempers other reports suggesting the economic recovery is gathering pace in France and elsewhere in Europe.

The European Commission predicts the euro economy will grow 0.4 percent this year, accelerating to 1.8 percent in 2004. The unemployment rate for the region has also held at 8.8 percent in the eight months ending October.

Tomorrow, a report will probably show French manufacturers were at the most confident in more than 2 1/2 years in December, according to the median forecast of 18 economists. That mirrors the rise in German business sentiment to almost a three-year high.

France's economy will expand as much as 2 percent next year, rebounding from growth of 0.2 percent this year, the slowest rate in a decade, Insee says. That isn't strong enough to trigger hiring by manufacturers struggling to lower costs to lift profits under pressure from the euro's appreciation.

``We're down about 4 or 5 percent from November 2002 and retailers are pessimistic,'' said Daniel Abouf, managing director of the Federation of Toy and Child Care Products, whose 120 members generate annual sales of 1.2 billion euros ($1.5 billion). He spoke in a televised interview with Bloomberg News.

Manufacturers have shed a net 209,200 jobs in the past 2 1/2 years, more than offsetting hiring by services companies and construction companies in two of the past three quarters. Alstom SA, which made the world's largest liner, Queen Mary 2, is cutting 7,000 jobs worldwide, while specialty chemicals maker Rhodia SA is trimming 572 jobs in France.


A report on Dec. 31 will probably show 15,000 more people were seeking work in November, according to the median estimate of five economists, too small a rise to bring down the unemployment rate. The jobless rate, at 9.7 percent in October, will near 10 percent in the first quarter of next year, Insee predicts.

``More than a quarter of the population is personally affected by the recession and there's been a significant drop in their planned Christmas purchases,'' said Gilles Goldenberg, a partner at Deloitte Touche Tomatsu. ``It's the first time we have seen such a drop. I thought Christmas was completely safe.''

Goldenberg's firm found in a November survey of 1,255 shoppers that the average French household budget for Christmas purchases was 565 euros ($681), or 31 percent less than last year.

Prime Minister Jean-Pierre Raffarin lowered income taxes and granted tax rebates worth 3.9 billion euros this year and plans 3.3 billion euros in tax reductions next year. These are being masked by higher payroll taxes, local government charges and an increase in tobacco prices.

Housing Starts

One part of the economy that stands out is the housing market, as homebuyers take advantage of interest rates at their lowest level, for France, since 1946.

New home sales rose by 33 percent in the third quarter and a report today showed construction companies started building 3.9 percent more homes in the three months ending Nov. 30 compared with a year earlier.

Purchases of household goods, ranging from garden furniture to washing machines, rose 1.7 percent last month, today's consumer spending report showed.

Today's consumer spending index covers about 27 percent of total household spending, which in turn accounts for more than half of France's gross domestic product. It doesn't include food, energy or services. Consumer spending rose 1.4 percent from November 2002adise.
Link Posted: 12/23/2003 3:21:55 AM EDT
Good! [beer]

Link Posted: 12/23/2003 3:46:22 AM EDT
GOOD NEWS, I hope the pompous bastards feel the pain!
Link Posted: 12/23/2003 4:00:15 AM EDT
What a good way to start the day.  Thanks for the news, Raven.

Link Posted: 12/23/2003 4:03:23 AM EDT
We were just there in September and boy were they bitching! The Euro had raised prices for things and American tourism was way down.

BTW, we spent very little while we were there.
Link Posted: 12/23/2003 4:08:13 AM EDT
That's all well and good.  But I think that that huge heatwave this year that killed hundreds of the frogs is just as responsible as the lack of American tourism and the decreased American purchasing of French goods.  But we have to keep stickin' it to them.  We must make them pay for their lack of respect and gratitude.  No Michelin tires on my Ford!
Link Posted: 12/23/2003 4:20:06 AM EDT
Meanwhile the US economy grew a staggering 8.2% in the 3rd quarter.  That's the biggest growth suprt in 20 years.  And next quarter's numbers will probably be as good.

I can't wait for earnings season in January [:)] Make me some monnay!
Link Posted: 12/23/2003 4:28:00 AM EDT
Reading that is more uplifting than a hot cup of coffee and a BJ this morning.
Link Posted: 12/23/2003 4:35:46 AM EDT
[b]The jobless rate, at 9.7 percent in October, will near 10 percent in the first quarter of next year[/b]

I suppose a lot of people are out of work since France is not selling anything to Iraq. And the French companies that were might not see any of the money for a while.

Of course, they will blame the US for that.
Link Posted: 12/23/2003 4:43:18 AM EDT
Damn French...my mother in law lives in the states and collects social security from france....bullcrapt...plus she can collects social security from us!
Link Posted: 12/23/2003 4:48:37 AM EDT
Originally Posted By ClayP:
Reading that is more uplifting than a hot cup of coffee and a BJ this morning.
View Quote

[b]NOW JUST HOLD ON A DAMN MINUTE THERE! Lets not get carried away![/b][:D]


Link Posted: 12/23/2003 4:51:49 AM EDT
Gee. After reading that all I can say is [b] too fu*king bad. [/b]
Link Posted: 12/23/2003 4:53:46 AM EDT
Pauvres grenouilles.  C'est la vie!
Link Posted: 12/23/2003 6:00:49 AM EDT
Originally Posted By reconBYfire:
Damn French...my mother in law lives in the states and collects social security from france....bullcrapt...plus she can collects social security from us!
View Quote

Thats a good thing. She could be collecting money from [b]US[/b] and taking it to France!
Link Posted: 12/23/2003 8:10:54 AM EDT
I think I almost felt sorry.  Don't worry, it was only a fleeting moment of weakness.
Link Posted: 12/23/2003 8:26:09 AM EDT
Good. No one deserves it more than them.
Link Posted: 12/23/2003 8:30:35 AM EDT
I'm gonna pop a bottle of California wine and celebrate!
Link Posted: 12/23/2003 8:34:16 AM EDT
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