FR: Business Climate Indicator

Thu Nov 23 01:45:00 CST 2017

Consensus Actual Previous
Level 110 112 111

Sentiment in French manufacturing improved slightly in November according to the latest INSEE survey. At 112, the headline climate indicator was a point firmer than in October, above market expectations and saw its highest mark since 2007.

The improvement reflected a marked increase in past output (23 after 16) and a minor pick-up in orders (1 after 0). Executives' personal outlook (16 after 17) was just marginally weaker but the general industry production outlook (31 after 30) strengthened a little.

Elsewhere developments were equally upbeat. Hence, morale in services gained a couple of points to 109 and was up by the same amount to 107 in construction and to 111 in wholesale trade. Retail (116 after 113) fared even better. These results are unequivocally bullish should point to a healthy set of flash November PMIs, due for release very shortly.

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.