| Consensus | Actual | Previous | |
|---|---|---|---|
| Index | 101 | 99 | 101 |
Highlights
Sentiment in French manufacturing deteriorated for a third straight month in May. From an unrevised 101 in April, the headline index dropped to 99, its first reading below the 100 long-run average since March 2021 and a couple of points short of the market consensus.
May's setback reflected a broad-based worsening in business conditions. Past output (1 percent after 9 percent) was particularly weak and there were falls too in overall order books (minus 21 percent after minus 17 percent) and overseas demand (minus 13 percent after minus 10 percent). Personal production expectations (4 percent after 5 percent) were little changed but general production expectations (minus 10 percent after minus 6 percent) slumped to their lowest level since November 2020, in the midst of the Covid crisis.
Across the other main sectors, sentiment also deteriorated in services (101 after 103), construction (108 after 111), retail trade (100 after 101) and wholesale trade (94 after 98). As a result, the economy-wide index shed 2 points to 100, its worst reading since April 2021.
Today's update is rather weaker than the flash PMI survey but both reports suggest that the French economy will be very sluggish this quarter. It also reduces the French ECDI to minus 25 and the ECDI-P to minus 29, both measures now indicating overall economic activity clearly falling short of market expectations.
May's setback reflected a broad-based worsening in business conditions. Past output (1 percent after 9 percent) was particularly weak and there were falls too in overall order books (minus 21 percent after minus 17 percent) and overseas demand (minus 13 percent after minus 10 percent). Personal production expectations (4 percent after 5 percent) were little changed but general production expectations (minus 10 percent after minus 6 percent) slumped to their lowest level since November 2020, in the midst of the Covid crisis.
Across the other main sectors, sentiment also deteriorated in services (101 after 103), construction (108 after 111), retail trade (100 after 101) and wholesale trade (94 after 98). As a result, the economy-wide index shed 2 points to 100, its worst reading since April 2021.
Today's update is rather weaker than the flash PMI survey but both reports suggest that the French economy will be very sluggish this quarter. It also reduces the French ECDI to minus 25 and the ECDI-P to minus 29, both measures now indicating overall economic activity clearly falling short of market expectations.
Market Consensus Before Announcement
Sentiment is expected to be unchanged on the month at 101.
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.
