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Economy in Brief

French Production Trend is Lower but Optimism is Intact
by Robert Brusca March 26, 2008

The chart on the left shows that price trends continue to press higher in France but the production trend is sharply lower.

For total industry we find similar results to those in manufacturing. The recent trend of production at -11 is below its mid-point, standing at the 46th percentile of its range. But the likely trend reading at 51 is in the 87th percentile of its range, a strong reading. Despite the current slowing and despite high energy and commodity prices and despite financial turmoil and despite a super strong and a still-rising euro, French industrialists have maintained their optimism. Orders are in the 74th percentile of their range with foreign orders relatively weaker in the 69th percentile of their range. This is unusual since in other large EMU countries foreign orders have been relatively stronger than domestic orders.

France is an interesting case in several respects. Its budget is now expected to overshoot its target as growth in revenues slow. The Finance Ministry is scaling back its forecast for growth. It is an odd time for businesses to be looking for the future trend in output to deviate so much and to become so much stronger than the current trend in output. Nonetheless, that is what the survey says.

INSEE Industry Survey
          Since Jan 1990 Since Jan 1990
  Feb 08 Jan 08 Dec 07 Nov 07 Percentile Rank Max Min Range Mean
Climate 107 108 109 110 68.0 64 123 73 50 101
Recent Trend -14 -6 4 3 43.1 134 44 -58 102 -5
Likely trend 43 47 44 43 79.2 8 63 -33 96 8
Orders & Demand -1 -1 1 4 70.1 46 25 -62 87 -14
Foreign Order s& Demand 1 0 6 4 66.3 67 31 -58 89 -10
Likely Sales Prices Trend 17 12 12 10 85.1 12 24 -23 47 1
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