RTTNews - French consumer confidence and business sentiment indicators edged up in May on expectations that the worst of the recession may be over. However, households remained highly cautious about future unemployment.

The consumer confidence index rose to minus 40 in May from minus 41 in April, INSEE said Wednesday. The reading was in line with economists' expectations.

Households' pessimism regarding the future living standards in France lessened notably. The corresponding indicator rose to minus 51 from minus 54. At the same time, the measure for past living standards remained unchanged at minus 76.

Consumers' also were less pessimistic about their future financial position, with the indicator rising to minus 17 from the previous month's minus 18. However, the past financial position indicator slid to minus 28 from minus 27.

The gauge for assessing households' view regarding the timeliness of making major purchases stood at minus 28, up from minus 30 in April.

Pessimism related to the future unemployment was on the rise, though there was a slight easing in past few months. Adding to the existing worries, manufacturers announced further job cuts recently.

The INSEE found that consumers' inflation expectations dropped to its lowest level since September 2004, to minus 55 in May from minus 53 in April.

In a separate release, the statistical office said the business confidence in May rose to 72 from 71 in April, while it was expected to rise to 73. The general production outlook indicator improved to minus 50 from minus 57 and the personal production outlook indicator moved up to minus 29 from minus 34.

Making the situation unfavorable for households and businesses, France recently confirmed recession. The second largest Eurozone economy contracted 1.2% in the first quarter from the previous three months, extending the downward trend that started in the second quarter of 2008.

The European Commission said in its spring forecast that GDP growth in France is expected to remain negative throughout 2009, but at a steadily diminishing rate. A timid recovery in late 2009 is seen if the impact of monetary easing reaps expected results and conditions stabilize in France's trading partners.

Also on Wednesday, Italian economic think tank ISAE said its consumer confidence indicator stood at 104.9 in May, unchanged from April. Meanwhile, economists had forecast an increase to 105. The latest reading was the highest since December 2007.

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