The manufacturing industry's business climate remained stable in September, reporting an index value of 99, which is just below the long-term average of 100. The balance of opinion regarding past production has bounced back, indicating a positive outlook. Nevertheless, order books experienced a decline, which implies that there is some uncertainty regarding future demand.

After a fleeting recovery in August, the food products and beverages sector experienced a decline, with its business climate indicator declining to 94. This was due to the deterioration of order books and production expectations. The manufacturing of apparatus and equipment products also encountered difficulties, extending a four-month downward trend and reaching its lowest point since August 2020.

In the interim, the transport equipment sector demonstrated resilience, with motor vehicles, trailers, and semi-trailers exhibiting robust performance. The indicator remained substantially above the long-term average as production levels rebounded. Conversely, the production of other transport equipment experienced a minor decline, despite remaining above the average.

The business climate indicator in the other manufacturing category decreased to 94, indicating challenges in a variety of sub-sectors, except other industrial products, which exhibited some stability. The manufacturing industry's overall stability is maintained; however, sector-specific vulnerabilities, primarily in the agricultural and machinery sectors, continue to weigh on the overall outlook, leaving the RPI at 14 and RPI-P at 20 respectively, well ahead of market forecasts of the French economy.

After rebounding 4 points in August to 99 and back near its long-term average of 100, sentiment in French manufacturing is expected to hold unchanged in September.

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.