FR: Business Climate Indicator

Tue Apr 24 01:45:00 CDT 2018

Consensus Actual Previous Revised
Level 110 109 111 110

INSEE's new survey found a slight deterioration in manufacturing sentiment this month. At 109, the business climate index was a point short of its downwardly revised March outturn and at its lowest level so far in 2018.

The latest decline reflected weaker past output (5 after 17) and slightly softer orders (0 after 1). However, executives' personal outlook on future production (15 after 9) climbed sharply and general production expectations (24 after 26) held up well.

Elsewhere, morale was unchanged in both services (107) and construction (107) but worsened significantly in retail trade (110 after 113). This could warn of another poor period for household spending after an already low-key start to the year. The economy-wide climate indicator weighed in at 108, a point below its March outturn and also it worst print in 2018 to date.

Today's results are a little softer than yesterday's flash PMI findings but both surveys indicate a slowdown in French economic growth since the start of the year. This should be confirmed in Friday's flash first quarter GDP data.

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.