Paris, June 4 (Bloomberg) -- French consumer confidence climbed in May for the first time since December as concern about unemployment eased to the lowest in almost a year, further evidence Europe's third-largest economy is recovering. ``Everybody in the office is decked out for the summer -- I need to do some catching up,'' said Sandrine Lucas, a 42-year old sales clerk shopping for clothes in Paris. ``It does help that you don't hear that much about people losing their jobs anymore.'' Companies are cranking up production as the economy recovers and may start hiring again soon, helping to lower unemployment from April's 18-month high. French industrial production rose for the third month in March, pushing business confidence to an 11- month high in April. An index measuring household confidence rose to a five-month high of minus 12, from a reading of minus 18 in April, government statistics office Insee said. Economists polled by Bloomberg News had expected the index to rise no higher than minus 16. Household spending, which accounts for over half of gross domestic product, helped boost growth in the first quarter. The economy expanded 0.4 percent after shrinking in the final three months last year.

Job Concern Eases
With business rebounding, some companies are firing fewer workers than expected. European Aeronautic, Defense & Space Co., Europe's largest aerospace company, may not have to cut all the 1,000 jobs it planned to eliminate this year, co-Chief Executive Philippe Camus said last Thursday. Others are already hiring. Ioltech SA, a French maker of eye surgery equipment, expects revenue to rise by a fifth this year. ``We'll need more staff,'' Ioltech's Chief Executive Philippe Tourrette said last week. Today's report showed an index measuring households' expectations about unemployment fell to the lowest since June last year, suggesting fewer people see the number of jobseekers climbing. An index measuring expectations about the standard of living in France surged to a 15-month high. ``The economy is improving and people are beginning to realize that,'' said Olivier Gasnier, an economist at Societe Generale SA in Paris. ``Unemployment has been one of the main reasons for their pessimism in recent months.'' The euro has risen nearly ten percent in the past four months amid signs that Europe's economy has started to recover from last year's slump. The single currency rose to 94.44 U.S. cents in trading today, the highest level in 16 months.

Champagne, Handbags
LVMH Moet Hennessy Louis Vuitton SA, the world's biggest luxury-goods maker, said sales increased 8 percent in the first quarter, led by demand for champagne and leather handbags. In the previous quarter, sales fell 4 percent. Joblessness is one of the top concerns of French voters ahead of National Assembly elections which will take place in two rounds of voting on June 9 and June 16. Both President Jacques Chirac's alliance of conservative parties and the outgoing coalition of Socialists, Communists and Greens have pledged to boost purchasing power and employment, though with different measures. Chirac, whose Union for the Presidential Majority analysts forecast will win a majority, has promised to trim taxes by 30 million euros ($25 million) and loosen a law limiting the workweek to 35 hours. The Socialists' supporters want to raise the minimum wage and subsidize jobs for workers of more than 50 years of age.

Chirac Leads
Chirac shared power with former Prime Minister Lionel Jospin's Socialist government for five years until winning re- election this month and appointing a caretaker government. Surveys by polling firms Sofres and Ipsos give Chirac's allies twice as many seats as the Socialists and their supporters. While the economic rebound is taking hold, its pace is slow, Societe Generale's Gasnier said. Economists predict that a report to be published at noon will show consumer confidence in the 12 countries using the euro probably remained unchanged in May. ``Yes, the economy is recovering, but we still have to make a lot of effort in the perfume industry to have people spend their money,'' said Clarins Chairman Christian Courtin-Clarins. ``Mother's Day was disappointing this year -- at the moment demand is flat in France.'' Clarins, whose profit plunged 64 percent last year on weak demand, needs consumers' help to make good on his pledge to increase sales at double the 3.5 percent rate analysts predict for the luxury-cosmetics market.

Purchasing Power
For demand to rise, inflation needs to come down to stop eroding consumers' buying power, analysts said. Accelerating inflation has kept a lid on household sentiment in recent months. French consumer prices advanced for a fifth month in April. Today's report showed that people's perception of their personal financial situation declined last month. Even so, their expectation about their personal finances in the months to come rose to the highest in a year and more people now see inflation receding. With the cost of a barrel of Brent crude oil down more than 13 percent in the past two months, consumer price growth may ease in coming months. Inflation across the dozen nations sharing the euro in May fell to a five-month low, according to initial estimates. The euro's rise against the dollar will also help keep import prices in check, preventing them from fueling inflation. Insee calculates confidence index it from responses to a questionnaire on households' financial situation, the standard of living, and whether now is a good moment to make purchases.