France INSEE Survey Shows Slightly Weaker Manufacturing While the Service Sector Improves

The industry climate gauge from the INSEE survey reports a standing in its 27th percentile with manufacturing production expectations at the 29th percentile; both are relatively weak readings. The services sector has a weak reading, too, that stands in its 36th percentile. The standing for services is slightly stronger than for manufacturing and production expectations, but both are basically in the lower one-third of the queue of readings for each sector. In September, industry climate has weakened although manufacturing production expectations improved slightly. The service sector index is slightly improved. In recent times, globally manufacturing has been weak, while the services sector has provided the bulk of the growth. According to the INSEE surveys, there was not much strength in either sector as of September.

Manufacturing The production recent trend observation for September did improve compared to August when it moved up to a -6.2 reading from -13 previously. However, orders and demand weakened to -19.5 in September from -15.9 in August; there was a similar deterioration for foreign orders and demand.

Prices show less pressure with the own-sector likely price trend moving lower to +1.2 in September from +2.3 in August. While the manufacturing price level overall trend just slips to 2.0 in September from 5.6 in August. The percentile standings for all of these readings are in or near in the lower third of their respective historic queue of data across the board. The only exception is foreign orders and demand that has a 56.3 percentile standing. That's the only standing above the 50th percentile, which puts the reading above its historic median on data back to 2001.

Services The services sector climate indicator moves slightly higher in September to 98.3 from 97.9 in August; both of those registering a significant improvement from July when the index stood at 95.1. However, the standing for the climate indicator is still at its 36.6 percentile, near the border for the lower third of all observations. On a ranked basis, the three-month moving average for climate has a 31.1 percentile standing. Although when we look at the 12-month moving average for services climate, it still has a relatively strong reading at 79.9% - just 20 percentile points from its all-time maximum. All of the percentile standings for services are weak except for sales prices, which are above the 50th percentile. The observed sales prices over three months has a 68.5 percentile standing while the expected sales prices over the next three months have a higher, 81.3 percentile standing and that's not good from the standpoint of getting inflation under control in France.

Services outlook- Still, the outlook has one of the firmer readings in the table; it improves slightly in September compared to August, and August had improved by two points compared to July. The percentile standing for the outlook is at its 44th percentile, still below its median but closer to the median level than most other entries in the table.

Summing up The services sector as plotted does not look much stronger or better than the manufacturing sector; however, on a ranking-basis, there's more firmness in services than in manufacturing. Still, there's very little positive momentum in either one of the sectors. The INSEE surveys for September represent weak readings that are not encouraging. Despite both being engaged in a short-term localized rebound, the longer trends for each series still point clearly downward.