FR: Business Climate Indicator

Thu Dec 21 01:45:00 CST 2017

Consensus Actual Previous Revised
Level 112 112 112 113

INSEE's year-end survey found French manufacturing in very good shape. At 112, the headline business climate index matched market expectations and was just a point short of November's upwardly revised multi-year high.

Past output (21 after 26) was again very robust although orders (minus 1 after 1) slipped slightly. Executives' personal outlook on future output was unchanged (15) while the general industry outlook was barely changed (30 after 31).

Elsewhere, the news was generally even more upbeat. Business sentiment improved in both services (111 after 109) and construction (109 after 107) while retail (115 after 116) gave back only minimal ground following a sizeable advance in November. As a result, the economy-wide climate indicator edged a point firmer to 112, its best reading since October 2007.

INSEE's December results essentially mirror the flash PMI and suggest that healthy fourth quarter GDP will precede sustained solid growth at the start of 2018.

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.