FR: Business Climate Indicator

Thu Jun 21 01:45:00 CDT 2018

Consensus Actual Previous Revised
Level 108 110 109 110

INSEE's June survey found no change in manufacturing sentiment. At 110, the climate indicator matched its upwardly revised May reading and so remained comfortably above its long-run average (100). The latest outturn was also stronger than market expectations.

The stability of the headline index masked a drop in past output (7 after 11) and a minor dip in orders (0 after 1) which were offset by a marked improvement in executives' personal outlook on future production (22 after 17). That said, general industry output prospects continued to decline (14 after 15).

Elsewhere in the economy, morale was similarly broadly flat. Construction (109 after 108) and retail trade (112 after 11) edged marginally higher while services (104) were steady and so failed to reverse May's 3 point decline. As a result, overall business sentiment was also unchanged (106) and some way short of its readings earlier in the year.

Today's results point to another only moderate flash June PMI survey tomorrow and further increase the likelihood of just a minor, if any, pick-up in economic growth this quarter.

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.