Sentiment in manufacturing was little changed in November according to INSEE's latest survey. At 102, the headline business climate indicator was just 1 point shy of its October reading, in line with market expectations and still above its 100 long-run average. Note that the large majority of responses to this survey were registered before the Paris terrorist attacks on 13th November.
The minor dip actually masked a small improvement in past output (10 after 8) but reflected instead a 3 point drop in the orders sub-index which, at minus 18, was some 6 points below its level as recently as August. Expectations were very mixed with executives' personal outlook on production down steeply (4 after 12) but the general industry production prognosis sharply improved (10 after 2).
The economy-wide sentiment gauge was steady at October's upwardly revised 102 with services flat at 101, but retail, construction and wholesale all a point firmer at 111, 91 and 101 respectively. This provides a rather more bullish picture than yesterday's November flash PMI which suggested a slowdown in overall business activity. With the real impact of the terrorist attacks not yet apparent in the data, the economic outlook is somewhat murky. However, the economy looks to have settled down onto a durable recovery path, albeit most likely a frustratingly sluggish one.
The indicator is a measure of the prevailing sentiment among French business leaders. The main focus is the manufacturing sector but the survey provides separate sentiment measures for construction, retail trade and services on a monthly basis and for wholesale trade every other month.
If you are looking for clues on French business sentiment, this survey would be a good starting point. The indicator is based on a survey that asks business leaders about their expectations for new orders and their overall impressions of the economy. The results are a diffusion index that reflects the difference between positive and negative responses as a percentage of the total number of answers. It uses 100 as the dividing line between positive and negative sentiment.
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