| Consensus | Actual | Previous | |
|---|---|---|---|
| Index | 95 | 97 | 97 |
Highlights
At 97, the business climate remained stable over the month and 2 points above the consensus.However, it remains 3 points below its long-term average. Order books present a positive trend, buoyed by the transport equipment sector, yet production indicators continue to decline. This suggests that while demand is improving, output constraints persist.
The rebound in global and foreign order books is encouraging, particularly in"other transport equipment," but production prospects have dipped to their lowest in nearly a decade, excluding the COVID-19 period. Workforce shortages remain a significant barrier, with 24 percent of firms reporting supply-side challenges above historical averages. Demand-side obstacles, however, show a marginal decline.
Elsewhere, the climate deteriorated in services, retail trade and construction, reducing the economy-wide index from 96 to a lowly 94. The latest update puts the French RPI and RPI-P at minus 14 and 0 respectively. This means that economic activity in general is running slightly behind market estimates, but only due to the weakness of prices.
The rebound in global and foreign order books is encouraging, particularly in"other transport equipment," but production prospects have dipped to their lowest in nearly a decade, excluding the COVID-19 period. Workforce shortages remain a significant barrier, with 24 percent of firms reporting supply-side challenges above historical averages. Demand-side obstacles, however, show a marginal decline.
Elsewhere, the climate deteriorated in services, retail trade and construction, reducing the economy-wide index from 96 to a lowly 94. The latest update puts the French RPI and RPI-P at minus 14 and 0 respectively. This means that economic activity in general is running slightly behind market estimates, but only due to the weakness of prices.
Market Consensus Before Announcement
Sentiment in manufacturing is expected to slip from November's 97 to 95, some 5 points below its long-run average.
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.
