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Julien Manceaux, senior economist at ING, notes that in France, consumer confidence stabilised in August at 102  after a  strong recovery in the last three months.  

Key Quotes

“Fears of unemployment, in particular, have fallen thanks to the good private job creation figures over the first six months and the decline in  unemployment to 8.5%. The figures from the INSEE survey published this morning, however, still show high saving intentions, which have not weakened since February.”

“The rise in consumer confidence has not yet pushed up consumer spending, which was  still down for goods in June (and saw no  growth in  the second quarter). However, we continue to expect a rebound in the second half of the year.”

“The business climate also remained broadly stable in August. This  survey continued to show weakening prospects for employment growth, confirming that improvements in the job market should come to an end, but only by early next year.”

“As a result, private consumption (which grew by only 0.2% quarter-on-quarter  in the second quarter after 0.4% in the first) should pick up in the second half of the year. However, the base effect is significant and it is unlikely that this improvement will bring consumption growth above 1.2% in 2019, after only 0.9% in 2018.”

“Only when households feel that their savings are replenished will  the measures taken have a greater effect on accelerating private consumption. That’s why we expect 1.4% growth in 2020.”