After reaching 100 in April, the business climate index in the manufacturing sector retreated to 97 in May. Overall order books fell markedly on balance, although there was a slight improvement in foreign order books, underscoring weaker domestic demand.

Among the major manufacturing sectors, transportation equipment fell to 100 in May from 105 the previous month, with motor vehicles falling to 96 from 94, and transport equipment sectors dropping back to 104 from 106.

Other manufacturing was stable during the reporting month at 94, the same as in April, while machinery and equipment rose to 101 from 99 in April. Economic uncertainty rose to 32 in May from 29 the previous month. The last time the index was above 32 was in March 2023 when it stood at 33.

The report doesn't do anything to dispel the challenges facing the French manufacturing sector. More broadly, the overall business climate index fell to 96 in May from 97 in May, with retail trade offering a bright spot, rising to 98 in May from 95 in April.

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.