FR: Business Climate Indicator

Tue Sep 26 01:45:00 CDT 2017

Consensus Actual Previous
Level 111 110 111

According to the new INSEE survey, sentiment in French manufacturing was little changed this month. At 110, the climate indicator was just 1 point short of its unrevised August mark and so close to the high seen since the Great Recession.

The minor dip in the index dip was due to softer past output (11 after 21) and this masked a healthier orders book (minus 1 after minus 4). There was also a strengthening in executives' personal outlook on future production (18 after 14) and well as a more optimistic reading on the general industry outlook (23 after 20).

Elsewhere, confidence was up in retail trade (112 after 108) and services (108 after 107) but flat in construction (104) and a touch weaker in wholesale trade (109 after 110). As a result, the economy-wide indicator was flat at 109 and so remained comfortably above its 100 long-run average.

Today's findings are not quite as robust as those in last week's flash PMIs but all the signs are that September was a good month for French business activity.

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.