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Economy in Brief

French Business Climate Goes South for the Winter
by Robert Brusca December 19, 2008

Business climate fell to 73 from 79 to a low since January of 1990 and tied for a life of series low last reached in June 1993 in this 35 year series. The recent trend and likely trend responses are also at their lowest since 2000. Order and foreign orders are now at their lowest since 2000 but they are very weak, in the bottom 5% to 7% of their respective ranges.

With this survey in hand INSEE now looks for France to suffer a deeper recession than previously thought. Exports are diving and plummeting sales now restrain and depress the manufacturing sector. The euro zone's second-biggest economy would probably contract by 0.8 percent quarter-on-quarter in the final three months of 2008 after growing just 0.1 percent between July and September, INSEE said in a quarterly report. In Q1 2009 INSEE forecasts that the economy will shrink by 0.4 percent and by 0.1 percent in the following quarter. In its previous quarterly report, published in October, INSEE had predicted a 0.1 percent decline in gross domestic product (GDP) in the third and fourth quarters of 2008. Its view clearly has worsened. Slowing global demand will continue to harm French exports, limiting any advantage gained from recent softening in the euro, the statistics office said (of course since this time the euro has strengthened significantly making this point all the more forceful). INSEE said that companies' efforts to run down surplus stocks are a further restraining factor on manufacturing output, especially in the fourth quarter.

INSEE Industry Survey
          Since Jan 1990 Since Jan 1990
  Dec
08
Nov
08
Oct
08
Sep
08
%tile Rank Max Min Range Mean
Climate 73 79 87 91 0.0 221 123 73 50 101
Production - - - - - - - - - -
Recent Trend -72 -68 -65 -41 0.0 222 44 -72 116 -6
Likely trend -35 -26 -19 -9 0.0 222 30 -35 65 6
Orders/Demand                    
Orders & Demand -56 -43 -31 -26 6.9 216 25 -62 87 -15
Fgn Orders & Demand -53 -47 -26 -27 5.6 214 31 -58 89 -11
Prices                    
Likely Sales Price Trend -8 -1 9 14 31.9 176 24 -23 47 1
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