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Economy in Brief

Readings Drop in May: Index to 96.6 in Bottom Quarter of Rank Range 
by Robert Brusca June 13, 2008

The Bank of France business indicator fell to 97 from 100.4 in May. After seeing the result the Bank of France cut its growth estimate for GDP to +0.2% down from +0.3% previously for the Q/Q gain. In the latest month production was weak. The survey respondents rated it in the bottom one percent of all production ratings since 1988. Even capital equipment was rated as low in the month.

The production outlook fared better with roughly mid-range rankings. Capital goods and consumer goods were particularly strong, above their range mid-points. The consumer goods ranking was in the top 14% of its historic range – a surprisingly strong result.

Demand was rated as solid overall with overall order books assessed as being above their range point in the top 40% of their range. But FOREIGN order books were assessed as very low, in the bottom 4% of its range.

New orders are mixed but weak. Total orders are in the bottom 6% of their range. Capital goods new orders were in the bottom quarter of their range. Consumer goods were in the 47th range percentile, nearly at neutral.

Stocks of goods on hand are mid range or higher as for capital goods and autos. Capacity use is rated as low, a bottom third of range response. Hiring, last month, was in the 33rd percentile of its range; the outlook is still much stronger, in its 80th percentile.

About the ranking percentiles: To derive the ranking percentiles we rank the various components from Jan 1988 to date then express the rank as a percentile of the total with 10% being strong and zero % weak. Ranking percentiles are a bit more useful than range percentiles because they place an observation in a ranking queue instead of being influenced by only the range extremes of high and low as with range percentiles. A bottom 23.7% ranking is a ranking is in the bottom twenty-three percent (bottom quarter of the range) of all readings since 1988.

Bank of France Monthly INDUSTRY Survey
          Since Jan-87 Ranking
  May-08 Apr-08 Mar-08 12-MO AVERAGE Average Percentile
Production-latest mo
Total Industry -12.41 2.44 -0.22 4 7 0.8%
Semi-Finished -15.57 7.01 -4.1 4 6 0.8%
Capital -9.09 11.17 1.36 8 7 4.5%
Auto -29.94 -13.88 -3.31 -4 7 6.1%
Consumer -6.5 0.87 3.67 7 8 2.9%
Agricultural & Food 0.32 -8.28 1.94 4 10 9.8%
Production Outlook
Total Industry 14.51 6.02 14.13 15 15 43.7%
Semi-Finished 12.55 3.55 10.84 14 13 46.1%
Capital 18.86 13.35 19.97 20 17 50.2%
Auto 16.63 12.77 14.39 17 15 47.3%
Consumer 22.95 -7.77 16.03 12 17 86.9%
Agric&Food 3.54 8.23 9.49 13 17 0.8%
Demand
Overall order books 12.1 16.01 17.7 24 5 59.2%
Foreign Orders -7.36 10.21 2.1 8 8 4.5%
New Orders
Total Industry -4.65 8.46 1.59 8 9 6.1%
Semi-Finished -8.92 0.9 -0.27 6 7 9.0%
Capital 3.69 14.81 5.4 10 9 25.7%
Auto -- -- -- -- -- --
Consumer 10.63 9.18 7.8 13 11 47.8%
Agric&Food -3.13 -6.77 -0.44 5 11 5.7%
Stocks: Finished Gds
Total Industry -1.72 0.71 0.66 -2 -2 48.6%
Semi-Finished -4.82 -1.43 -2.28 -2 -2 20.4%
Capital -1.29 -0.12 -3.97 -2 -3 64.9%
Auto 4.85 10.82 17.42 -2 -3 75.1%
Consumer 0.19 1.23 2.19 -1 0 44.9%
Agricultural & Food -0.21 12.17 0.33 1 0 46.1%
Capacity Utilization 82.04 83 82.99 83 83 31.8%
Hiring            
Latest Mo -4.39 -0.55 -2.58 -1 -1 33.5%
Outlook -3.38 -2.96 -3.88 -2 -3 80.8%
Industry Sentiment Index 96.65 100.4 103.91 105 106 23.7%
Ranges, percentiles since January of 1988
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