Business sentiment improved in October to its best reading since April, led by the manufacturing industry, with the overall Business Climate Index rising to 97 from 96 in September. Still, the reading is below its long-term average of 100.

Manufacturing sentiment improved to 101 from 97 in September, the first time the reading was above 100 since April and the best result since March 2024. Retail trade also helped nudge the overall index higher, gaining to 99 in October from 92 the previous month. The increase was helped by trade and repair of motor vehicles, suggesting the market for used cars could be perking up.

The construction and services industries were lower, thereby keeping a bigger increase in the overall index in check. Both industries saw their index levels fall from 98 in September to 96 in October. Deteriorating order books and managers' views on past and future activity weighed on the construction industry, while the services sector was plagued by lower expectations for activity and demand.

Political turmoil continues in France, with the Macron government coming under criticism in how it is dealing with the selection of its Prime Minister. While the improvement in the overall index and manufacturing is a positive sign, today's results aren't a harbinger for a suddenly robust French economy.

The index is expected flat at 96 in October from 96 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.