Consumer morale and spending data around Europe on Tuesday showed some unexpected resilience, suggesting shoppers' gloom about the economic downturn is being tempered by the steep fall in inflation. Consumer spending in France, the euro zone's second largest economy, unexpectedly rose in November and consumer confidence edged up in the Netherlands, albeit at historically low levels.
Such data does not point to buoyant consumer demand by any means. But it confirms previous signs that shopper morale is holding up better than among businesses, where activity and confidence indicators have plunged from one record low to the next amid the global financial turmoil.
"It's a figure that rather confirms the relatively good state of French consumption at the end of the year," BNP Paribas analyst Dominique Barbet said of the 0.3 percent increase in November consumer spending, up 1.0 percent from the year before. "Consumer spending is the only thing that's holding up amid the crisis, because everything else is going down," said Alexander Law, chief economist at Xerfi.
Dutch consumer sentiment rose slightly in December to -28 from -29, moving further away from a five-year low of -31 posted in July, with analysts attributing the resilience to the sharp drop in pump petrol prices. In Italy, the euro zone's third largest economy, where Prime Minister Silvio Berlusconi frequently appeals to citizens to keep shopping, consumer morale slipped for a third month in December on fears about jobs, the ISAE institute reported. "The length and duration of the recession is in the hands of citizens," Berlusconi said on Saturday, arguing that workers with job security, especially in the public sector, had every reason to spend more rather than less, due to falling prices.