FR: Consumer Mfgd Goods Consumption

Wed Dec 23 01:45:00 CST 2015

Consensus Actual Previous Revised
Month over Month 0.1% -0.4% -0.7% -0.8%
Year over Year 0.8% 1.6% 1.4%

Household spending on manufactured goods was significantly weaker than expected in November. A 0.4 percent monthly drop followed a slightly steeper revised 0.8 percent decline in October and means that this category of consumption has now contracted every month since August. Annual growth of purchases eased from 1.4 percent to 0.8 percent, its slowest pace since November 2014.

However, the disappointing headline was essentially wholly attributable to a 4.7 percent monthly slump in textiles, in part probably reflecting unseasonably warm weather. Elsewhere autos edged 0.1 percent firmer, household goods were up 0.7 percent and other manufactured goods products were flat.

That said, total spending on goods was down fully 1.1 percent versus October when it decreased 0.2 percent. Average sales in October/November were 0.7 percent below their level in the third quarter and warn that overall consumption could well have a negative impact on fourth quarter real GDP growth. This would be consistent with the newly downgraded INSEE forecast which saw a drop in household expenditure capping an expected quarterly rise in total output at a 0.2 percent.

The sentiment surveys available so far have not pointed to any major effect from the Paris terrorist attacks. However, November's fall in consumer demand, albeit to some extent weather-related, warns that actual spending may now be rather softer than would previously have been the case. In any event, the fourth quarter does not seem likely to see any pick-up in the momentum of what remains a very sluggish economic recovery.

Consumption of manufactured goods by consumers is an indicator of consumer spending for household durable goods such as autos and furniture. The data are released separately but also as part of the measure of total goods spending.

This indicator is a measure of retail sales and is unique to France. It measures consumer spending for household durable goods such as autos and furniture. The data are seasonally and workday adjusted. These adjustments eliminate the fluctuations that are solely due to changes in the number of working days. The data appear to be particularly sensitive to the number of worked Saturdays. With consumer spending a large part of the economy, market players continually monitor spending patterns. Retail sales are a measure of consumer well-being.

The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps auto sales are especially strong or apparel sales are showing exceptional weakness. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.