Paris, March 1 (Bloomberg) -- French consumer confidence fell for a second month in February, as unemployment rose to a 15-month high. ``Everybody talks about recovery and I want to believe them,'' said Elvire Simon, a housewife and mother of two in Paris's wealthy 16th district. ``But all I see right now is people losing their jobs.'' A confidence index declined to a five-month low of minus 15, from minus 12 in January, the national statistics office Insee said. An index measuring households' concern about unemployment surged to the highest level since October 1996. Dwindling consumer confidence may limit the extent of France's recovery from the first contraction since 1996. Consumer spending accounts for more than half the French economy. At the same time, executives in France, Germany and Italy, the three largest economies that use the euro, all grew more optimistic last month. Michelin & Cie, Europe's No. 1 tiremaker, said on Tuesday that profit will increase this year. Wanadoo SA, France's biggest internet service provider said last week that it will break even this year after widening its losses in 2001. ``People see rising unemployment,'' said Laurent Imbert, who helps manage 6 billion euros ($ 5.2 million) at Ofivalmo Gestion in Paris. ``The reality is probably less black than that.''

U.S. Recovery
The U.S. economy, the world's largest, grew an annualized 1.4 percent last quarter, the fastest pace in a year, a report showed yesterday. That suggests the recession on the other side of the Atlantic has ended. German business confidence rose to a six-month high in February, the Ifo institute said this week. Still, an index measuring people's view on whether this is a good time to make purchases fell to the lowest since April 1998. ``People are a little more hesitant to subscribe to paid online services,'' said Wilfried Verstraete, Wanadoo's chief financial officer. ``The critical problem is unemployment which has the biggest impact on consumer confidence.'' Industrial production fell in December, after exports plunged to a two-year low. Companies such as Arcelor SA and Valeo SA have announced about 14,000 job cuts this year, helping to push in January.

`Consumers Are Also Voters'
Prime Minister Lionel Jospin, who wants to unseat President Jacques Chirac in presidential elections, would benefit from an economic rebound, analysts said. He edged ahead of his main rival in two recent poll. Two rounds of voting are scheduled for April 21 and May 5. ``Consumers are also voters,'' said Gilles Corman, director of political studies at polling company Sofres. ``Of course, a quick rebound would help Jospin.'' While a recovery would eventually bring down unemployment, an increase in demand may also boost prices. After declining steadily since May last year, French inflation rose for the second month in January, surging to an eighth-month high of 2.4 percent. Some retailers used the introduction of euro cash as an excuse to round prices up, Insee said Tuesday. So far people aren't worried. An index measuring people's outlook on inflation fell to minus 45 from minus 34, indicating they expect price growth to recede in coming months.

European Inflation
Inflation in the dozen nations sharing the euro slowed to 2.5 percent in February after reaching a five-month high of 2.7 percent in January, a preliminary European Union estimate shows. That's after dropping to 2 percent in December, the lowest level since May 2000. European Central Bank policy makers, who aim to keep inflation below 2 percent, have suggested that the four rate reductions last year may be enough to boost growth. And futures trading suggests investors aren't expecting another cut soon. The implied yield on the three-month Euribor contract maturing in March is 3.37 percent, 0.12 percentage point above the ECB's benchmark rate. The September contract yields 3.63 percent. The French consumer confidence index, which is seasonally adjusted, peaked at a reading of 5 in January last year. It balances positives and negative responses of households on their financial situation, the country's standards of living, and whether now is a good moment to make purchases.