France's manufacturing business climate in August shows mixed results across various sectors. Overall, this indicator has improved to 99, close to its long-term average, signalling a positive rebound from 95 in July. Key drivers include higher personal production expectations and increased foreign orders, despite a decline in past production levels.

The food and beverages sector sees its business climate indicator rise to 97, the highest since March 2023, thanks to consistent growth in order books. In contrast, the machinery and equipment sector is facing challenges, with its indicator falling to 94, marking the lowest point since November 2020 due to widespread sub-sector declines.

Transport equipment manufacturing has experienced a significant recovery, especially in other transport equipment, reaching unprecedented levels since records began in 1990. However, the motor vehicle sub-sector remains below average. Lastly, other manufacturing has a slight uptick, but remains below the long-term average, with noticeable declines in basic metals and industrial products.

Overall, the manufacturing sector shows resilience with sector-specific variances. To this end, the August update positively changes the RPI and RPI-P to 13 and 10 respectively, indicating that the economy is performing slightly above market expectations.

After falling a steep 4 points in July to 95, a level not seen since December 2020, sentiment in French manufacturing is expected to partially recover to 96 in August.

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.