PARIS, Oct 22 - French consumer spending rose 3.4 percent in September, bouncing back from a sharp drop in August with the biggest monthly rise in more than four years, national statistics office INSEE said on Wednesday. September consumer spending rose 3.9 percent year-on-year, INSEE said. The September jump -- the biggest monthly rise since July 1999 -- was led by a 4.4 percent increase in spending on cars. Purchases of textiles and leather goods also rose 4.4 percent. The rebound was above market expectations, with economists polled by having given a mid-range forecast for a 1.6 percent month-on-month rise. Monthly data on household spending, traditionally the main driver of growth in France, has seen ups and downs over the last year. INSEE revised its August figure to show a 2.9 percent drop in spending. It had previously reported a 2.7 percent fall. The rebound in spending last month offered some hope that the French economy, the euro zone's second largest after Germany, ended the third quarter on a positive note after a heatwave in August slowed activity.
After contracting by 0.3 percent in the second quarter, the French economy needs to show growth for the July-September period to stave off recession -- defined as two consecutive quarters of negative economic growth. The Bank of France last week said its latest business survey produced a forecast for 2003 growth of 0.2 percent, including 0.3 percent in the third quarter and 0.5 percent in the fourth. Citing the central bank report, Finance Minister Francis Mer also said last week that the economy was getting back on to the path of "reasonable growth". French companies remain cautious about the near-term outlook, however. Carmaker PSA Peugeot Citroen warned on profits for the second time in three months on Monday, and car part maker Valeo posted a dip in third-quarter profit. The impact of a strong euro played a role in both firms' troubles. Companies have also sought to cut costs by shedding workers, which has dampened consumer morale and helped push up France's unemployment rate up to 9.6 percent. Advertising agency Havas last month said it planned to axe 1,600 jobs -- the latest in a series of such cuts by leading French firms.//