French spend despite gloom

French consumers spent more than expected in November despite drooping morale, a trend economists hope will be repeated in Italy where banking scandals forced consumer morale to retreat in December from 3-year highs.
Spending in France, the eurozone's second biggest economy, bounced back after 2 months of declines and increased by 1.1 percent in November - more than twice the consensus forecast, data from French statistics office INSEE showed on Wednesday.
Sliding consumer sentiment failed to dent French spending but a spate of financial scandals knocked consumer confidence in Italy back to 108.2 in December, a fall from a downwardly revised 108.7 in November.
"Italian sentiment is showing only a modest decline, and from a high level, so it is unlikely to affect consumption patterns, as has been the case in France where we saw a sharp decline in confidence in November but spending rose anyway," said Dominique Barbet, senior economist at BNP Paribas in Paris.
Italian economic research group ISAE said Italian shoppers' outlook about the economy in general improved but that soundings of how they saw their own situation had taken a hit.
"People's view of their personal circumstances worsened, principally because of a marked fall in their opinion about their savings, that was probably linked to the recent financial and banking scandals," ISAE said in a statement.
Bank of Italy Governor Antonio Fazio resigned on Monday following allegations of malpractice in a bank take-over scandal.
French consumer confidence fell in November to its lowest since the series began two years ago. The drop followed France's worst urban unrest in almost 40 years.
However, analysts were cheered that spending had proved resilient and said the French data released on Wednesday supported expectations that consumption would support growth this year and next.
"These are positive figures and we have returned to a situation where consumption is supporting the French economy," said Alexandre Bourgeois, economist at Natexis Banques Populaires in Paris. "The figures once more prove that weak consumer confidence doesn't necessarily stop consumers from spending and that there can be a disjunction between the two in the short term."
INSEE said last week household consumption remained the main driving force behind economic expansion. Its forecast of 1.6 percent French growth in 2005 is underpinned by a projection that household consumption will rise 2.0 percent this year.