Manufacturers in Belgium and France Report Improving Current Conditions and Prospects: Wholesale and Retail Trade [...]

The results of the April surveys of business conditions in the Euro Zone are beginning to appear. Most of these surveys are expressed in terms of the percent balance between those who see improvement and those who see deterioration.

France and Belgium reported today. Both countries showed improved sentiment, particularly when compared with a year ago, as can be seen in the first chart, which compares the year-to-year changes in the percent balance reporting on the general outlook for manufacturing in both countries.

Improvement in sentiment regarding foreign orders has played a significant part in the overall improvement in sentiment in both countries. The upward trends in the percent balances from big to small negatives in the case of Belgium and from big negatives to positives in the case of France are shown in the second chart.

The Belgium survey is much broader than the French. The French survey conducted by INSEE (Institute National de Statisque et Etudes Economique) covers only the manufacturing industry, while the Belgium survey conducted by the National Bank of Belgium covers, in addition to manufacturing, other industry, wholesale and retail trade, the construction, ex public works, and service industries. The most marked differences among business opinion in Belgium are seen between those engaged in business services and those engaged in wholesale and retail trade. Since the end of 2003, there have been more optimists than pessimists in the service industries, while the pessimists have prevailed in the wholesale and retail trade. The third chart shows the percent balances for the service industry and for wholesale and retail trade.

The sharp run up in the price of oil of the past week or so is probably not reflected in the April surveys and could have a dampening effect on future business opinions.