French INSEE business climate deteriorates to December 2009 level
23.01.12 10:35

The French business climate index decreased slightly from 92 in December to 91 in January. The indicator remains below its long-term average (100) for the fifth consecutive month. While the manufacturing index continued to deteriorate (-3 points), the services confidence indicator slightly improved (+1 point) in January. Today's print confirms our view that we will see little growth in France in Q1 (-0.1% q/q), as the sector will feel the pinch from less favourable global economic conditions as well as fiscal tightening.  


In detail

All economic sectors were in decline except services and building (+1): retail trade (-4 points), industry (-3 points) and wholesale trade (-2 points).

In the manufacturing sector, the January business climate index lost 3 points to 91 and remains now, for the fifth consecutive month, below its long-term average (100). Business leaders feel that activity in previous months has slowed (December: -5; January: -7; long-term average: 5). Also, global order books decreased to -32 in January from -26 in December, above their long-term average (-17), and foreign orders books (level) dropped to -26 in January from -20 in December. Stocks of finished goods are regarded as above their normal level (16; long-term average: 13).

Conversely, in the manufacturing sector, the services confidence indicator rose in January, but only by 1 point, to 92 and stands, for the sixth consecutive month, below its long-term average (100). Business leaders feel that the general outlook has deteriorated by 2 points compared with December (December: -17; January: -19) and continues to stand below its long-term average (-5) but they consider that their activity increased in the recent period (December: -1; January: 1; long-term average: +4). Looking ahead, business leaders expect demand to be less favourable in the coming months (December: -3; January: -6; long-term average: +4).

Regarding the jobs market, business leaders feel that the level of job creation has decreased over the past few months (December: 11; January: 7; long-term average: 4). They expect employment growth to continue to slow in the coming months (December: 1; January: -3; long-term average: 3).

source: BarCap
 
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