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Economy in Brief

French Consumer Confidence Slips
by Robert Brusca  October 28, 2020

The French household sector assessment edged lower in October as it fell to 94.0 from September's 95.3 reaching its lowest level since May 2020. Confidence has a ranking in its lower 41.1 percentile on data back to 2000, marking confidence as below its median value for that period. Compared to January 2020, just before the coronavirus struck, household confidence is lower by 9.6 points.

Living standards over the past 12 months are assessed as barely changed over the last four months; during this period, they are evaluated to have been in the lower 35.5 percentile of their historic experience. Looking ahead after a false improvement in September, there is erosion to a -54 diffusion value which corresponds to a 10.1 percentile standing- extremely weak. Both past and expected living standards have slipped by about 25 points from their respective January levels. France is feeling the pain of a second wave.

Despite substantial help and protection from the government, expectations of unemployment rank in their 92.7 percentile and the survey response value has rising by 63.7 points since January. Unemployment expectations have crept up in the last two months but are below where they stood in July. It is an unsettling situation especially with the virus expanding again in France and lockdown responses spreading widely. France also combats a growing anti-Islam mood after a French teacher was beheaded for discussing in his class and showing a cartoon of the Prophet Muhammad.

Both past and expected prices development are weakening and have weakened especially in the last two months. Past price developments have a 19.4 percentile standing while expected price developments have a higher, 50 percentile standing, right on their median value. Past price developments have slipped by only 2.9 points from their January value while expected prices developments have fallen by 7.3 points from their January value.

Respondents evaluate the time as favorable to save and rate their ability to save strongly as well. Both rank in the top 2-4 percentiles of their respective historic queues of value back to 2000. The favorable to save response slipped a bit this month but had been rising; it is 24.8 points above its January level. The ability to save which is a forward-looking assessment has weakened, but it is still higher by 6.7 points than its January level. With lockdowns of various sorts in place, it is simply much harder to spend any money!

The spending assessment for making a major purchase is little changed over the past three months. It has a well below median 38.3 percentile standing in October and is nearly 10 points lower from its January level

Assessments of the financial situation both past and expected have changed little over the past four months. However, the past assessment has a much higher, 86.7 percentile standing, while the future assessment has a much lower, but still above median, 54.4 percentile standing. The past response is one point higher than it was in January while the look-ahead response is 4.8 points lower.

The small table below compares the INSEE rankings for the Household, Services and Manufacturing sectors from January to October, monthly. Two of three evaluations show a sharp fall in March (exception: household) and a sharp fall in April (no exception). Condition assessments remain extremely depressed though July. In August there is some pick up the service sector that lasts through September but then falls back in October. Manufacturing continue to build and improve in September, holding most of those gains in October. The household evaluation gets back to a ranking of 47.2 in September, its highest since June, but then slides back to 41.1 in October.

The second wave
The second round of the virus is now fully enfolding France. As August began, France had logged 187,919 cases of COVID (Source here). At that time, the curve of cases was starting to rise. By September 1, the case load had risen to 286,007. By October 1, it was up to 577,505; by October 27, that had climbed to over a million cases at 1,198,695. In early-September, France began to have a daily infection rate that surpassed its peak rate of April. That began to ring some alarm bells. From that date, the infection spread took hold and has risen sharply leading to a series of moves to suppress the spread. On October 25, the daily infection rate surpassed 52,000 per day, but in the last two days that reading has diminished. Still, France clearly is in the middle of a very disruptive virus situation. It can be expected to continue to weigh on economic data.

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