France broke the constant stream of grim economic tidings from Europe today with news of an unexpectedly strong 1.5 per cent June rise in household spending.
The French statistics office, INSEE, said the recovery after two months of decline was mainly due to a spending spree on cars and above all clothes, driven by the advent of summer vacations and perhaps the start of discount sales late in the month.
Some economists said the rebound would only be temporary and that the trend was still downwards as Europe bore the brunt of a US-induced global downturn. Other said French tax cuts and economic policy in general were relatively better tuned to shore up internal demand and compensate for falling exports.
The data from the euro zone's second largest economy, which has expanded faster than its major European partners for several years, came on the heels of gloomier figures on business morale and expectations in Italy and Germany.
Italy's ISAE research institute said business confidence there had slipped again in June to its lowest since May 1998, while Germany's influential Ifo business barometer, published yesterday, hit a five-year low.