FR: Business Climate Indicator

Tue Jul 25 01:45:00 CDT 2017

Actual Previous Revised
Level 109 108 109

INSEE's new business climate survey for the French manufacturing sector showed business confidence in the sector remains very strong, with the headline index unchanged at 109 in July, matching the multi-year highs recorded in both May and June. Preliminary PMI survey data for July published earlier in the week indicated an improvement in conditions in the manufacturing sector.

The INSEE survey's measure of recent past output fell slightly from 11 to 10 in July, while executives' personal outlook on future output also declined from 13 to 10. This was offset, however, by a strong improvement in general industry expectations from 16 to 21, with the measure of new orders steady at minus 2.

The headline index for the services sector increased slightly from 103 in June to 104 in July, with the overall index steady at 109. In contrast, the preliminary PMI data suggests that activity has weakened in the services sector in July, resulting in a lower composite number.

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.