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French household confidence stable but weak

Consumer confidence index stays steady at 86 points but well below long-term average

Gulf News

Paris: French household confidence was stable but at a fairly low level in January after rising slightly in December, data released on Tuesday by the national statistics institute Insee showed.

The consumer confidence index remained at 86 points in the Eurozone’s second biggest economy, well below its long-term average of 100 points, an Insee statement said.

In neighbouring Germany, consumer confidence has risen for the first time for three months amid burgeoning optimism that Europe’s biggest economy has put the worst of the debt crisis behind it, a separate poll found.

Market research company GfK said its household confidence index was forecast to inch upwards to 5.8 points in February from 5.7 points in January.

GfK said that both consumers’ income expectations and their willingness to spend picked up sharply and their economic expectations were also on the rise.

“The current calm on the financial markets is making Germans more confident at the start of this year,” the statement said.

Back in France, consumer’s assessment of their current financial position was unchanged, while their outlook for the future was dimmer than in December, Insee said.

Households were also less inclined to make major purchases, but they expected to be able to save some money now and anticipated being able to do so even more in the future.

That said, fewer households felt in January that it was a good time to put some money aside, even though they felt in general that their financial position allowed them to do so.

Capital Economics senior economist Jennifer McKeown underscored the widening economic gap between the Eurozone’s two leading economies, and said: “The relationship between France and Germany is likely to come under further strain, making compromises on important Eurozone policies difficult to reach.”

In France, the number of new homes under construction fell by 19.6 per cent last year from the level in 2011 meanwhile, data released by the housing ministry showed.

The number of housing permits for new homes slipped by 7.7 per cent to 429,851 units.

The trend deteriorated sharply in the fourth quarter, when the number of homes under construction fell by 30.1 per cent and permits dropped by 24.8 per cent, whereas they had not given up more than 1.9 per cent in any of the preceding three quarters.

“It has dropped off since the beginning of the summer,” economics professor Michel Mouillart told AFP in reference to the housing starts number.

The French economy ended 2012 on a weak note, and in the construction sector, loans for French housing plunged by an annualised 26.4 per cent despite ultra-low interest rates.

The French government has forecast economic growth of 0.8 per cent this year, but that figure might be revised lower, while a new International Monetary Fund estimate puts French growth at 0.3 per cent.

Mouillart said: “The problem is no longer 2013, but 2014,” while noting that the property market should begin to pick up slightly, though he was not sure the government would meet its target of building 500,000 new housing units per year.

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