Sentiment in French manufacturing has improved this month. At 100, February's headline index is up a couple of points versus January's downwardly revised mark and in line with the market consensus. This is its highest level since last July and also the first time since that month that the measure has at least matched its long-run average.

Production (0 percent after minus 8 percent) stabilised having fallen in the previous three months and orders books (minus 17 percent after minus 19 percent) declined at a slightly slower rate. However, expected employment growth (3 percent after 6 percent) slowed and both personal production expectations (5 percent after 7 percent) and general production expectations (minus 8 percent after minus 7 percent) deteriorated. Expected selling prices (0 percent after 4 percent) were also softer.

Elsewhere, sentiment was stable in construction (103) but worsened in both services (99 after 101) and, more notably, retail trade (99 after 104). As a result, the economy-wide gauge dipped from 99 to 98.

Today's mixed update points to a sluggish February for the French economy and argues against any significant pick-up in the flash PMI data due shortly. Still, at now 21 and 10 respectively, the RPI and RPI-P show overall economic activity still running a little ahead of market expectations.

At a consensus 100 for January, forecasters see the business climate indicator inching higher from December's 99.

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.