| Consensus | Actual | Previous | |
|---|---|---|---|
| Index | 103 | 104 | 103 |
Highlights
Sentiment in French manufacturing continued to improve in February. At 104 the headline index was up a point from January's unrevised level to reach its highest mark since last July. It was also just on the firm side of the market consensus and now 4 points above its long-run average.
February's modest gain reflected both stronger past output (16 percent after 11 percent), which matched its highest level since January 2022, and orders (minus 14 percent after minus 16 percent), which saw a 4-month peak. Meantime, general production expectations (0 percent after minus 7 percent) improved markedly but personal production expectations (14 percent) were only unchanged. At the same time, expected selling prices (28 percent after 33 percent) posted their lowest reading since October 2021 but remained well above their long-run average (4 percent).
Across the other main sectors, sentiment was also a little firmer in services (106 after 105) and retail trade (102 after 101) but softer in construction (112 after 114). As a result, the economy-wide index edged a point stronger to 103.
Today's update is rather more bullish about French manufacturing than yesterday's flash PMI survey. Moreover, it lifts the French ECDI to 27 and the ECDI-P to 31, easily their highest values so far in 2023 and pointing to a possible upside surprise on first quarter GDP growth.
February's modest gain reflected both stronger past output (16 percent after 11 percent), which matched its highest level since January 2022, and orders (minus 14 percent after minus 16 percent), which saw a 4-month peak. Meantime, general production expectations (0 percent after minus 7 percent) improved markedly but personal production expectations (14 percent) were only unchanged. At the same time, expected selling prices (28 percent after 33 percent) posted their lowest reading since October 2021 but remained well above their long-run average (4 percent).
Across the other main sectors, sentiment was also a little firmer in services (106 after 105) and retail trade (102 after 101) but softer in construction (112 after 114). As a result, the economy-wide index edged a point stronger to 103.
Today's update is rather more bullish about French manufacturing than yesterday's flash PMI survey. Moreover, it lifts the French ECDI to 27 and the ECDI-P to 31, easily their highest values so far in 2023 and pointing to a possible upside surprise on first quarter GDP growth.
Market Consensus Before Announcement
The headline index is seen flat at 103.
Definition
INSEE is France's National Institute of Statistics and Economic Studies. 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.
Description
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.
