French INSEE consumer sentiment index rises in January

The French INSEE consumer sentiment survey for January came in better than expected. In the prior month, French economic confidence took a sharp turn for the worse when the Gilets Janues protests increased. But while the mass demonstrations have continued in 2018, they have not been quite so disruptive.

And with some consumers perhaps also comforted by President Macron’s sharp U-turn on fiscal policy – including a commitment to raise the minimum wage by EUR 100 per month, abolish tax on overtime pay and scrap a tax hike faced by pensioners – today’s INSEE survey implied that consumer sentiment has rebounded a bit this month. The headline index was up 5 points on the month, returning to November’s level of 91. However, that is still a comparatively downbeat reading, being 13 points lower than one year ago and 9 points below the long-run average.

Looking at details, the major indices for consumers’ assessment of personal finances and overall standard of living rebounded markedly. Similarly, the share of households considering it a suitable time to make major purchases were up sharply;

“Overall French consumers appear to remain quite downbeat. And we certainly do not expect consumer spending to provide a significant boost to French economic growth this quarter”, said Daiwa Capital Markets Research.

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