As I keep indicating the French economy – although not a spectacular success – continues to outperform the German one. This is interesting, since the French political system has been much more laggard than the German one in implementing reforms. That is why I place emphasis on the demographic differential.
Consumer spending in France, Europe’s third-largest economy, rose the most in 16 months in August as unemployment retreated and retailers cut prices.
Spending on manufactured goods rose 1.9 percent from July, when it increased 1.2 percent, the statistics office Insee said in Paris today. Economists predicted an increase of 0.3 percent, according to the median of 23 estimates in a Bloomberg survey. From a year earlier, spending jumped 5.7 percent, the biggest year- on-year jump since June 2000.
Unemployment dropped the most in more than four years in July and companies such as Ikea SA offered discounts. Today’s report suggests spending, after a second-quarter drop, will spur French growth and fuel expansion in the 12-country euro region, helping offset a 55 percent increase in oil prices.
“It’s the summer’s second miracle after the drop in unemployment,” said Marc Touati, chief economist at Natexis Banques Populaires in Paris. “It’s very good news for third- quarter growth. Is it going to last if hiring doesn’t pick up? The increase in oil prices is going to crimp purchasing power.”