Sentiment in manufacturing was unchanged in November according to the latest survey from INSEE. At 103, the headline climate indicator matched its upwardly revised October reading, its third consecutive month at this level.
The stability of the headline index reflected a modest rise in past output (9 after 7) offset by a slight deterioration in order books (minus 16 after minus 15). Personal production expectations (7 after 9) also softened but the general production outlook improved (3 after 1).
Elsewhere, morale was up in construction (99 after 96), services (102 after 101) and in retail (104 after 100) but worsened in wholesale (96 after 98). As a result, the economy-wide climate indicator held steady at 102, just above its 100 long-run average and in line with the flat trend seen over much of the year.
Today's results are rather less optimistic than November's (flash) PMI which suggested some acceleration in overall business activity, albeit masking a modest slowdown in the manufacturing sector. However, neither report points to a particularly robust fourth quarter for real GDP.
INSEE's business climate indicator aims to summarise the mood of French business leaders. The survey asks questions about output, orders and inventories and expectations for future business. These are synthesised into an overall index of sentiment, adjusted so that the long-run average is 100. The main focus is the manufacturing sector but the survey also provides separate confidence 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.