Fresh readouts on European consumer morale and spending on Thursday dented hopes of an economic recovery after a poor start to 2005, but British shoppers bucked the trend. French national statistics office INSEE said that household spending rose 0.5 percent in June.
That was less than expected and all the more disappointing because in France where consumption has held up better than in much of the euro zone and kept economic growth higher than in Germany and Italy.
The French figures showed particularly disappointing spending on manufactured goods in June, and there was a further slide in May in the Netherlands and yet another drop in Italian consumer morale in July.
But Britain surprised with data showing retail spending rose more quickly than at any time in the past 1-1/2 years in a balmier-than-usual June, confounding forecasters who had expected consumption to show some of the weakness plaguing much of mainland Europe.
FRENCH JOBLESS: French concern about unemployment, which at 10.2 percent is the highest level in over five years, has apparently been weighing on confidence and willingness to spend.
"What drove consumer spending was the boom of the real estate market and low inflation," said Emmanuel Ferry, an economist at Exane said.
"Now we have a normalisation of consumer spending which is more in line with the job market situation."
In Italy, the economic research institute ISAE said consumer confidence fell for the third month running in July and to its lowest level since June 2004, with ISAE's seasonally adjusted confidence index falling to 100.9 from 102.9 a month earlier.
Italy dipped into recession earlier this year.
Spending fell too in the Netherlands for a fifth month in a row in May, the Dutch statistics office said.
DISCOUNT BRITAIN: Britain's Office for National Statistics said retail sales rose 1.3 percent in June, the fastest rise since December 2003 and six times bigger than analysts had reckoned, prompting some of them to say they were now less sure about the prospect of an interest rate cut in August to boost economic activity.
The statisticians put the surge down to an earlier start to seasonal discount sales. Others suggested a spell of unusually warm weather was probably also responsible for a significant rise in clothes sales.
"These data are unlikely to prevent a rate cut in August but, if consumer demand is now recovering, are likely to prevent more aggressive policy easing later in the year and into 2006, 2 Royal Bank of Scotland said of the British retail report.
While economists said the British figures were surprisingly good, they were fast to point out that the British retail sector and employers' federations had published less flattering accounts of who retail sales were going.
"All in all, the June retail sales data look more like a statistical blip rather than a trend reversal. July sales are likely to be much worse, also because of last week's bomb explosions in the centre of London," BNP analysts said.
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