PARIS, April 1 - French consumer confidence slumped in March to its lowest level in more than six years, reflecting the despondency already well entrenched even before the outbreak of hostilities in Iraq on March 20. National statistics office INSEE said its consumer confidence index fell to minus 32 from minus 26 in February, its lowest level since December 1996. The figures were well below the minus 27.2 consensus forecast of economists polled by . "The retreat of the index is mainly due to the drop in sentiment about living standards in France...and whether now is a good time to make large purchases," INSEE said in a statement.
INSEE told the report was compiled from telephone calls to around 2,000 households between March 1 and March 19 -- before U.S.-led military action in Iraq began. The French morale figures came the day after a European Commission survey showed consumer sentiment in the 12-nation euro zone at a nine-year low in March, as households worried over the economy and rising unemployment. The part of the confidence survey recording household views on the quality of life in the coming months edged further into the gloom at minus 49, compared to a revised minus 40 previously. The part measuring consumer readiness to make large purchases fell to minus 26, from a revised minus 18.
A separate part of the questionnaire not included in the calculation of the index showed households' pessimism over unemployment had reached an all-time high, INSEE said.
Labour Ministry said on Friday that French unemployment had risen in February to 9.2 percent, largely on sluggish growth. Consumer confidence is watched as a pointer to spending, traditionally the main driver of growth in the euro zone's second biggest economy. On Friday, INSEE warned a slower rise in household consumption was the main immediate threat to growth. But the slowdown has already forced the government to slash its 2003 growth forecast to 1.3 percent from 2.5 percent. On Monday Prime Minister Jean-Pierre Raffarin said growth had halved in four months, the worst slowdown in recent history. That could stymie Raffarin's avowed strategy of meeting tough EU budget deficit rules through economic growth rather than austerity measures.//