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Economy in Brief

BOF Survey Rises Encouraging the Bank to Hold the Line on its Outlook for Growth
by Robert Brusca September 12, 2008

The BOF indicator has been weak and it has been weakening. But in August the indicator put on the brakes, and actually rebounded. While every other EMU country is cutting, chopping or shaving its forecast the BoF has held firm on its outlook armed with this tiny rebound in the context of a steep downtrend in the index.

The BoF projects Q3 growth at 0.1%. The survey points to some slight increase in activity but trends have been diminishing. All readings in the industry survey are below their historic averages. The overall industry index resides in the 13th percentile of its range of values since 1987. Production outlook responses are in the bottom 25 percentile of their ranges. All industries’ production outlooks are weak except for capital goods which amazingly continues to reside in the 88th percentile of its historic range. Consumer goods, in contrast, are in the bottom 14 percentile of their range agriculture and food industries are in the bottom 8 percentile of their ranges.

Order books are weak. Both raw readings slipped this month. For total orders the series resides in about the bottom third of its range. But foreign orders are much weaker and are now in the bottom 5 percentile of their historic range. New orders are also weak month to month.

It is the production outlook and production in the current month readings that have improved in this August survey. This is a current activity series and another based on plans. But if actual orders are so much weaker and if order books are emaciated, why are plans for output so strong? The BoF survey still raises a lot of questions about France’s optimism.

Bank of France Monthly INDUSTRY Survey
        12 MO Since Jan-87 Ranking
  Aug-08 Jul-08 Jun-08 AVERAGE Average Percentile
Production-latest mo
Total Industry 4.69 2.09 0.45 3 7 30.6%
Semi-Finished 4.84 -4.1 -0.76 2 5 44.1%
Capital 1.1 5.58 9.98 6 7 21.2%
Auto 7.76 6.32 -22.28 -3 8 53.1%
Consumer 8.42 4.48 10.68 6 8 50.2%
Agric&Food 5.42 1.41 -0.74 4 10 22.9%
Production Outlook
Total Industry 2.75 -5.71 1.82 5 7 15.5%
Semi-Finished 0.23 -4.78 -2.79 4 6 18.4%
Capital 14.98 0.54 7.8 9 7 88.2%
Auto 3.75 -13.05 10.62 14 14 25.7%
Consumer 10.46 -3.55 8.72 9 16 14.3%
Agric&Food 8.83 6.95 7.96 11 16 7.8%
Demand
Overall order books -1.63 2.6 5.36 17 4 36.7%
Foreign Orders -6.91 -4 -5.55 4 8 4.9%
New Orders
Total Industry -3.24 0.26 -3.39 5 8 8.2%
Semi-Finished -1.19 -3.42 -2.03 3 7 19.6%
Capital 1.86 12.92 -6.11 7 9 24.1%
Auto
Consumer 10.37 10.5 9.69 11 11 44.1%
Agric&Food -12.21 2.72 -5.94 2 10 0.8%
Stocks: Finished Gds
Total Industry -1.59 0.09 0.54 -2 -2 55.9%
Semi-Finished -2.72 -0.14 3.49 -2 -2 37.1%
Capital 3.8 0.94 2.08 -1 -3 95.5%
Auto -18.44 6.36 -11.74 -5 -3 13.5%
Consumer -3.48 -0.17 -0.3 -1 0 18.0%
Agric&Food 1.57 -1.82 3.11 1 0 59.6%
Capacity Utilization 80.72 81.17 81.51 83 83 9.8%
Hiring
Latest Mo -2.82 -3.37 -2.47 -1 -1 44.9%
Outlook -4.52 -5.48 -3.62 -2 -3 73.5%
Industry Sentiment Index 93.55 92.35 94.86 102 104 13.9%
Ranges, percentiles since January of 1988.
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