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Economy in Brief

French Consumer Sentiment Makes a Small Bounce
by Robert Brusca September 26, 2008

The small rise in French consumer sentiment comes as Q2 GDP is revised to show a larger drop amid weakness across other Euro Area countries. The rise in sentiment is somewhat like the improvement in US consumer sentiment in September. Energy prices moved lower for a spell and consumers usually react strongly to changes in energy prices. But energy costs have since moved higher. The overall French index stand in the lower five percent of its historic range. Survey respondents say over the past 12 months their living standards were in the bottom 2% compared to historic responses. For the next 12 months they expect an improvement with responses that are in the bottom 10 percentile of their historic range.

The spending environment is not very favorable for major purchases with a rating only in the lower 8 percent of its historic range or a ranking that is 221st out of a possible 225.

Putting range percentiles aside over this period there are 225 months of observations. Seven of the key measures rank 221 or worse. That is by ranking the readings we find they reside in the bottom two percent among all observations (see table to identify those categories).

The bounce in the French household confidence reading is not significant. It will have to show it can weather more storms ahead instead of just react well when global oil prices fall.

INSEE Household Monthly Survey
          Since Jan 1990 Since Jan 1990
  Sep
08
Aug
08
Ju
08
Jun
08
%tile Rank Max Min Range Mean
Household Confidence -44 -45 -47 -46 5.3 222 10 -47 57 -18
Living Standards
past 12 Mos -80 -80 -82 -78 2.0 223 18 -82 100 -38
Next 12-Mos -51 -54 -59 -57 10.8 222 15 -59 74 -19
Unemployment: Next 12 51 43 36 21 80.0 60 73 -37 110 29
Price Developments
Past 12Mo 44 54 61 63 83.5 7 64 -57 121 -16
Next 12-Mos -54 -42 -30 -29 6.6 223 31 -60 91 -34
Savings
Favorable to save 17 18 18 20 36.1 173 40 4 36 23
Ability to save Next 12 -16 -18 -20 -21 24.1 198 6 -23 29 -9
Spending
Favorable for major purchase -37 -38 -38 -37 8.6 221 16 -42 58 -13
Financial Situation
Current 8 7 7 8 23.8 172 24 3 21 12
Past 12 MOs -34 -35 -36 -34 6.5 222 -5 -36 31 -17
Next 12-Mos -18 -20 -21 -23 14.7 221 11 -23 34 -1
Number of observations in the period: 225
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