French consumer sentiment index drops slightly in October

The signals from this week’s euro area consumer sentiment surveys came in slightly mixed. The European Commission’s flash survey indicator rose to the highest level since early 2011, whereas Italy’s ISTAT consumer sentiment index rose for the fifth straight month in October to its best reading since January 2016 as households overlooked political uncertainty and instead took comfort from the ongoing economic rebound.

On the contrary, the German GfK consumer sentiment index dropped slightly for the second straight month. But it stayed close to the series high reached two months ago while the willingness-to-buy index rose to a six-month high.

The French consumer sentiment released today saw the INSEE index fall for the fourth straight month to 100, consistent with the long-run average but down from the decade high of 108 reached in June. The moderation in French sentiment from the enthusiasm that followed Macron’s election victories implies that some households feel uneasy about the implications of new administration’s labor market reforms and public spending cuts. That was arguably reflected in the survey in a decline in consumer expectations for their own financial situation, as well as downwards revision to their willingness to make major purchases in the coming twelve months, noted Daiwa Capital Market Research.

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