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Enron Mail |
French consumption: the winter of discontent Household manufacturing consumption (Oct) Actual: -0.4%mom, +3.0%yoy UBS Warburg: +0.2%mom, +4.3%yoy Consensus: -0.2%mom, +3.9% yoy Previous: -0.1%mom, +4.3%yoy October consumption data are clearly disappointing, not only because consumption contracted but also because previous numbers were revised significantly down. Moreover, taking out the large positive impact from car consumption, numbers look even weaker. We think the bad performance of the labour market is eventually taking a toll. We expect the fourth quarter to remain very weak in terms of consumption. * The monthly decline in consumption is quite severe, but it is important also to note that September growth was revised to -0.1% while the original number was +0.2%. * Car consumption is in line with preliminary information (+0.8% mom, +11.1%yoy) but this is balanced by a very weak retail sector (-0.5%mom, +0.9%yoy). Hence the underlying trend, without the car effect, is even weaker than what is suggested by headline numbers. * Numbers in Q3 were buttressed by the employment premium which was paid to low income people. But the underlying trend, with the sharp deterioration of the labour market, is a negative for consumption. We remain very pessimistic about the short term prospects of the labour market. Hence we believe the consensus is still too high. St?phane D?o Economic Research UBS Warburg Tel : +33 1 48 88 30 36 Fax : +33 1 47 63 48 08 Mob : +33 6 76 85 33 18 Stephane.deo@ubsw.com
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