PARIS (MNI) – French retail sales rose in May, boosted by sales of
televisions in advance of this summer’s soccer World Cup, the Bank of
France estimated Monday on the basis of its monthly business survey.

The central bank said seasonally adjusted retail sales volumes
jumped 1.0% in May and were 4.5% higher on the year. Both food sales and
sales of manufactured goods rose 1.1% on the month.

In the manufactured goods sector, sales of popular electronic
equipment rose 14.7%, driven by the sale of televisions to people
preparing for the World Cup. Furniture sales rose 5.5% m/m and sales of
household appliances rose 1.1%.

New car sales eked out a modest 0.7% m/m gain in May, but were
still 5.5% below the previous-year level. The May increase followed an
11.3% m/m decline in April, which had followed a spurt in new car sales
registered in March — though the March rise was largely an accounting
effect due to a flood of invoices from cars ordered at the end of last
year before the reduction in public subsidies.

Among other categories, sales of books, paper and jewelry rose in
May, while hardware was off 14.2% m/m and do-it-yourself products were
down 4.0% m/m. Clothing sales were off 2.6% m/m and shoes were down 9.1%
m/m.

The results in May help offset a 1.2% drop in April and could mean
that the second quarter won’t be as weak as feared. Still, sales in the
March-May period were down 0.6% compared with December-February. A
strong June could mitigate or even avoid a negative 2Q after a 1.9%
downturn in 1Q, when auto sales dropped 7.4%.

However, the near-term still doesn’t look particularly bright.
French consumer sentiment deteriorated in May as mounting worries about
inflation — especially food and energy prices — weighed on family
finances and expected living standards, the national statistics
institute, Insee, reported late last month. The report said that job
worries, though marginally lighter, “still remain intense.”

In its spring economic outlook, the national statistics office
Insee forecast a 1.5% drop in manufactured goods spending in 2Q and a
0.2% dip in total private consumption.

The weakness in consumption, due to the squeeze on real incomes
from slowing wage gains, rising prices and the reduction in public
supports, is likely to accentuate the drag from contracting investment,
leaving the economy dependent on growth impulses from foreign demand
and, eventually, a turnaround in the inventory cycle.

–Paris bureau, +331 4271 5540; Email: stephen@marketnews.com

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