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French consumer morale weaker than expected on jobs fears
July 27, 2012 / 7:50 AM / 5 years ago

French consumer morale weaker than expected on jobs fears

PARIS, July 27 (Reuters) - French consumer confidence fell unexpectedly in July to its lowest level since February in the face of growing fears about unemployment as a slew of companies unveil plans for major layoffs, a survey showed on Friday.

The INSEE official statistics office said that its consumer confidence index fell to 87 in July from 89 a month earlier. The June figure was also revised down from 90 originally.

The reading, well below the long-term average of 100, fell short of expectations in a Reuters poll of 16 economists which had indicated an average forecast of 90.

The survey showed that a rash of headlines about factory closures and surging unemployment were taking their toll on consumer morale with the proportion of households reporting it to be a concern at the highest level since June 2010.

The number of households expecting their personal finances to get tighter in the months ahead worsened while the number expecting their economic situation to get tougher rose the most since November 2007.

France’s new Socialist government has made fighting unemployment a top priority but is struggling to halt a wave of layoffs in the face of a deteriorating economic outlook.

The nation’s biggest carmaker PSA Peugeot Citroen announced plans this month to cut 8,000 jobs in France and companies such as Air France, Alcatel Lucent and Sanofi also have job cuts in the works.

Unions have warned that up to 75,000 job cuts could be forthcoming as companies, many of which withheld plans to reduce their workforce until after elections in May and June, cut capacity in the face of a European downturn.

The jobless total rose in June for the 14th month running to hit its highest level in nearly 13 years, according to labour ministry data on Wednesday.

The consumer confidence figures bode ill for June consumer spending data due on Tuesday, with economists forecasting an increase of 0.6 percent on average over the month.

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