In February 2025, the manufacturing sector showed signs of recovery, with the business climate indicator rising to 97, edging closer to its long-term average of 100. The order books improved, and personal production prospects strengthened, yet concerns remain as global demand continues to lag.

The manufacturing of transport equipment led the recovery, with its climate indicator surpassing its long-term average. A rebound in order books and production prospects, particularly in motor vehicles and trailers, drove this resurgence. Similarly, machinery and equipment manufacturing saw an uptick, although it remains below its historical norm. Meanwhile, food and beverage manufacturing stagnated, with a declining production outlook despite a recovery in foreign orders. The other manufacturing category remained weak, with improvements in wood, paper, and printing offset by declines in chemicals and plastics.

Labour shortages and supply chain constraints persist, limiting output, though sourcing difficulties have slightly eased. Despite a decline in expected selling price trends, inflationary pressures remain. Workforce size expectations fell to their lowest since April 2021, suggesting caution among manufacturers.

While momentum is improving, manufacturing is not yet out of the woods. Demand uncertainty and supply-side constraints keep optimism in check. The latest update leaves the French RPI at minus 14 and minus 10, meaning economic activities are slightly behind market expectations.

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.