In France, household spending is back, truly but not deeply. Household confidence is now above the long-term average for the first time since April 2018. Their financial situation is improving fast: in 2019 purchasing power is expected to post its best performance (+2.7%) since 2007. As interest rates are at the same time back to the low level reached in 2016, housing permits are now stabilizing (-10% below the October 2017 peak) and construction turnover is benefiting (+9.3% y/y in the 3-month period ending in April). The consumer is partially back, despite two laggards. Auto purchases fell in H1 (by -1.8% y/y) as a result of the lengthy transition to electric vehicles. And food purchases were burdened by inflation (+2.3% y/y on processed food in June) so that food retail was the only retail branch which posted decelerating sales growth in 2019 YTD. Excluding these two laggards, consumption reached a new peak in May 2019. It should continue in the next months, before potential new risks may arise in fall (Hard Brexit, trade tensions with the U.S.).
