Consumer spending in France, Europe's third-largest economy, was unchanged in February as a jump in demand for cars offset a drop in purchases of clothing and household goods. Purchases of manufactured goods in France rose a revised 3.3 percent in January, up from a previously reported 2 percent, Paris-based national statistics office Insee said. Economists had expected a 0.7 percent drop, the median of 28 estimates in a Bloomberg News survey showed. ``Spending remains the engine of growth in France,'' said Eric Vergnaud, an economist with BNP Paribas SA, which forecast a 0.1 percent dip. He expects the economy to grow 1.7 percent this year, in line with the government forecast. ``We expect employment and investment to accelerate in the second half.''
A 4.4 percent gain in French automobile spending, which followed a 4.5 percent plunge in January, may have been boosted by discounting, said Vergnaud. PSA Peugeot Citroen, Europe's second-largest carmaker, predicted this month Western European sales will ``more or less'' stabilize after two years of declines. The January increase in consumer spending also resulted from seasonal sales. Household spending, more robust in France than in Germany and Italy, has been the weakest part of an economic recovery in the dozen nations sharing the euro. Consumer spending, the largest part of the region's economic output, may be set back following Madrid bombings March 11 that killed more than 200.
Italian Confidenc
In Italy, the Rome-based Isae Institute said confidence fell more during the two days after the Madrid attacks than it had after Sept. 11, 2001. That dropped crimped the index's gain for the month. It climbed to 101.9 from a revised 98.9 in February, the lowest in more than a decade. A Belgian central bank index of business confidence, due out at 3 p.m, may show a decline to minus 6.5 from minus 5.9, according to the median forecast of 16 economists. The report is regarded by some economists as a leading indicator for Europe because of Belgium's trade ties to the region's largest economies. It's the first business confidence report from the euro region for March. ``The Madrid attacks aren't going to help consumer confidence,'' said Nicolas Claquin, an economist with HSBC-CCF in Paris, who expects the French economy to expand 1.9 percent this year. ``Low confidence, high unemployment and mediocre gains in household purchasing power may weigh on spending in coming months.'' Growth in the euro region slowed in the fourth quarter to a quarterly pace of 0.3 percent. Falling industrial production and stagnating consumer demand this year prompted economists at banks including J.P. Morgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley to lower growth estimates for 2004. Unemployment among the 12 nations sharing the euro has held at 8.8 percent since March 2003, equaling the highest since 1999. ///www.bloomberg.com