Sentiment in French manufacturing surprisingly rebounded in June. From an unrevised 99 in May, the headline index rose to 101, back above the 100 long-run average and the first monthly increase since February.

June's rebound reflected improvement in industrialists' opinion about past output (7 percent after 1 percent), overall order books (minus 17 percent after minus 21 percent), and personal production expectations (8 percent after 5 percent). Other readings of business conditions were mostly flat on the month, however, with finished goods inventories remaining at 14 percent, expected workforce size at 10 percent, and general production expectations rising marginally (minus 9 percent after minus 10 percent).

Across the other main sectors, sentiment remained flat in services (102), but worsened in construction (107 after 108) while improving in retail trade (102 after 100). As a result, the economy-wide index remained flat at 100, matching its worst reading since April 2021.

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.

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.