French Biz Climate Indicator Holds Mostly Steady

France’s industry survey from its statistical agency INSEE remains quite firm throwing off readings that are at the top one-third or higher of their respective ranges since 1990: Business climate, production, production trends, orders and demand - the whole lot of it remains firm. While the various readings have been slipping recently, in a broader sense, they have steadied at this top one-third of range mark, at a fairly firm level.

What is a touch less firm is INSEE’s assessment of the French MFG sector. A similar survey of just MFG shows the outlook for production at its 64^th percentile and its trend at the 60^th percentile. These are slightly weaker readings than for overall industry. The recent and likely trends for IP get stronger marks at 68^Th percentile and 77^TH percentiles, respectively. Orders and demand come in with readings at the 69^th and 66^th percentiles. On balance the French surveys for Industry and MFG remain on the firm side. MFG shows a touch more slippage than the overall.

Of course, there has been a lot of criticism from France recently over the exchange rate. A report I produced earlier in the week showed that within EMU France had gained competitiveness Vs the general EMU level but was lagging Germany by a significant amount. As the euro remains strong or becomes stronger this positioning could be a factor in how the French economy performs.

The chart at the top reminds us of two things. The first is that the French index is off peak. The second is that the Yr/Yr gain in the index has dissipated almost entirely. That suggests that there is almost no further upward momentum to the growth rate, not that the industry or MFG growth rates themselves will not remain positive.