* Consumer spending down 0.4 pct q/q, up 1.3 pct m/m
* Consumers worried over record unemployment
* Spending accounts for 56 pct of French GDP
By Ingrid Melander
PARIS, April 30 French consumers bought fewer
cars, tables and chairs, and clothes in the first part of the
year, challenging the government's pledge to steer the euro
zone's second largest economy away from recession.
Consumer spending accounts for more than half of France's
output and is the motor of the economy. It fell last year for
the first time in 19 years.
Record unemployment is still pushing households to keep
their wallets closed. An unexpected rebound in March, largely
due to heating staying on through cold weather, was not enough
to stop a 0.4 percent January to March quarterly decline.
The data prompted Jacques Creyssel, head of the FCD business
federation, to warn of a fresh contraction in purchasing power
this year. He called the March rebound of 1.3 percent
Philippe Waechter, chief economist at Natixis Asset
Management, agreed. "Household consumption will remain lifeless
this year and I wouldn't expect much change next year," he said.
An opinion poll showed last week that 77 percent of people
reckon their purchasing power will contract this year after
shrinking in 2012 for the first time in nearly 30 years. Some 58
percent of respondents plan to cut spending in the coming
months, the Mediaprism survey showed.
Even sectors which have long been more resilient are also
feeling the pinch, with 40 percent of respondents saying in the
survey that they will spend less on food.
"We are in a particularly difficult time for consumption,
including for food," Creyssel said. His federation represents
France's major retailers including Carrefour and
"NOT HAPPY DAYS"
The hushed alleys of a large mass-market furniture shop on
the edge of Paris are indicative of the dearth of spending by
households who are cutting back on all but the essentials.
"This place should be swarming with people on a Saturday,
and there's no one," said vendor Hamid Ouafai, looking around,
on a recent weekend, at the piles of boxes, lamps and chairs
standing untouched around him in the Fly furniture shop.
A quick look at his computer just before 2 pm that day told
Ouafai that his section of the shop has grossed about 1,500
euros so far, far from the target, already revised down, of
7,000 euros for the day.
"People don't have money to spend anymore ... These are not
happy days," he said shaking his head.
The household savings rate will be key to how consumption
fares this year after the drop in consumer spending last year
was mitigated by people digging into their savings.
"Will it be the same in 2013? Looking at 2012 we would hope
so but there is a risk. If households get more worried about
unemployment or worry that more tax increases could come they
could increase rainy day savings," said Cedric Audenis, head of
economic forecasting at INSEE.
"We would rather expect a growth rebound to come from
abroad, because our partners like Germany and the United States
have better fundamentals and, at home, we don't expect a rebound
either from consumption or business investment," he said.
The government forecasts that household consumption will
barely grow - by 0.2 percent overall - this year and contribute
to keeping the economy just out of recession.
But many economists view the forecast as too optimistic and
instead predict a slight contraction.
In contrast, in EU powerhouse Germany, criticised in France
for insisting on euro zone-wide austerity, consumer morale rose
to its highest since October 2007, data showed.