French consumer spending drops in Jan on weak car sales

PARIS Thu Feb 28, 2013 3:36am EST

PARIS Feb 28 (Reuters) - French consumer spending dropped by a steeper-than-expected 0.8 percent in January as car sales slumped, data showed on Thursday, underlining the malaise in an economy teetering close to recession.

Analysts polled by Reuters had expected household spending, a key motor of the French economy, to dip 0.2 percent.

The INSEE official statistics office said car sales dropped 11.7 percent in January, after a 5.6 percent rise in December, contributing to a 1.1 percent year-on-year decrease in overall January spending. Spending on energy rose by 1.5 percent.

INSEE revised December spending show a small rise of 0.2 percent versus a previous flat reading.

Spending has been dampened for months with gloom running high over rampant unemployment, now at a more than a 15-year high as factories lay off workers, and growth that is falling far short of the government's initial targets.

"The outlook for consumption in France is not particularly bright," said ABN Amro senior economist Joost Beaumont, noting households will be affected in the months ahead by tax rises, slowing wage growth and continued high unemployment.

President Francois Hollande admitted at the weekend that sickly growth would make it tougher to achieve his goal of stemming the relentless rise in unemployment by end-2013. (Reporting by Paris Newsroom; Editing by Toby Chopra)

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