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FR: Business Climate Indicator
| Actual | Previous | |
| Index | 102 | 105.0 |
Highlights
The business climate indicator for the manufacturing sector contracted to 102 in February from 105 in January. It's worth noting that January's result was the highest reading since July of 2022. Furthermore, today's result marks the third consecutive month the reading is above 100. The last time that happened was the three months beginning in February 2024.
Order intake continues to remain a daunting challenge, however. While the reading for foreign order books was stable at minus 6 in February, that for overall order books fell to minus 16 from minus 11 in January, signaling weak domestic demand.
Among the main components, the outlook in the transportation sector fell to 110 in February from 112 the month before. There was a pullback among manufacturers of motor vehicles and trailers, slipping to 95 from 98 in January. At the same time, the manufacture of food and beverages also saw a pullback, falling to 92 from 95. Other manufacturing also contracted, dropping to 98 in February from 100 the month before.
Just as things were beginning to stabilize and companies seemingly having come to terms with 15 percent US tariffs, the long-awaited Supreme Court decision landed last Friday. With the decision calling the levies illegal, turmoil is once again roiling the global economy as President Trump has vowed further duties. For now, the EU has put its agreement with the US on ice, but it is nearly certain that uncertainty will prevail.
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.