French consumer spending rose in March, reversing a decline seen in February on higher expenditure on automobiles and textiles, official data showed Friday.

According to the statistical office INSEE, household spending rose 1.1% month-on-month in March after falling a revised 1.8% in February. Meanwhile, economists had predicted just 0.2% growth. Annually, spending climbed 0.6%.

In March, expenditure in durables increased 1.2% after a 0.3% fall in February. Spending in automobiles rose 2.9% after a slight increase of 0.3% in the previous month. Expenditure in durable goods continued to decrease with a 0.5% fall. Consumption expenditure in textile-leather rose 3.5% after a sharp 8% decline.

In the first quarter, household consumption expenditure in manufactured goods grew 0.4% after a 0.6% fall in the fourth quarter of 2008.

Today's data signal that this trend has been sustained in the first quarter, despite the historic recession, Dresdner Kleinwort analyst Rainer Guntermann said.

The analyst said a weak but stable trend in consumer spending is cushioning the impact of export and investment weakness. Yet the rise in unemployment is in the early stages and dampens the outlook for domestic demand on a longer perspective.

The analyst stated that France cannot escape the global recession but, unlike many other Eurozone countries, the economic nosedive in the first quarter does not seem to have accelerated, against original expectations.

The Bank of France said the economy would contract 0.8% in the first quarter, sharper than a 0.6% fall estimated in February. The International Monetary Fund on Wednesday said in its world economic outlook that the French economy will contract 3% in 2009 and then expand 0.4% in 2010.

Guntermann said gross domestic product fell 1% in the first three months of the year on the previous quarter, suggesting that the pace of recession has not quickened in France, unlike in Germany and the Eurozone overall.

However, the analyst said a sharp contraction of the economy for the full year remains inevitable, though, even if the retreat could now be on a more moderate scale than the current forecast a 3.5% fall for 2009.

A day earlier, the statistical office said business confidence increased more than expected in April, the first increase after a series of declines in past several months.

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