Consumer confidence index remains unwavering in France

Weekly Market Snapshot

• Consumer confidence for France stood at 85 in July 2023, unchanged from the previous month and a little lower than the market forecast

Behind the Headlines: What happened?

The strength of an economy lies in its consumer spending, and the consumer confidence index is a statistic that reflects consumer sentiments about both the present and future state of the economy, serving as a key gauge of overall economic health. Simply said, it provides an early signal regarding the strength of the broad economy.

In France, the consumer confidence index is based on a survey of approximately 2000 homes. This survey is carried out by the French National Institute of Statistics and Economic Studies (INSEE). Questionnaires are given out to households and this questionnaire focuses on: the past and future state of the French economy, the state of one’s finances, unemployment, the intention to make significant purchases, and the state of one’s own savings capacity. The index stood at 85 in the month of July, indicating that consumers are seeing the glass half empty when it comes to the future of the economy (as it’s below 100).

The Inside Scoop:

Although general consumer sentiment was as sour as a lemon, consumers in France were more enthusiastic about the outlook for their standard of living as -47 points were recorded for the month of July as against -50 points in June. Expectations for personal financial status also improved, reaching -13 points in July compared to -15 points in June.

Conversely, unemployment concerns increased significantly to 14 points in July from 10 points in June, while future savings capability decreased to 3 points in July from 8 points in June.

The Bottom Line:

An index above 100 indicates an increase in consumers’ confidence in the future economic condition, which could suggest they are less likely to save and more likely to spend money on significant purchases in the following twelve months. Values lesser than 100 suggest a gloomy outlook concerning future economic changes, which may result in a predisposition to save more and consume less.

From the figures stated, citizens in France are not too enthusiastic about the future economic situation of the country and have worries concerning the unemployment rate, which remained unchanged at 7.1% in Q1, 2023, compared to the previous quarter. The continued consumer pessimism suggests a low level of spending in the country, which could help reduce inflation but weaken economic growth prospects.

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