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Economy in Brief

Bank Of France Business Indicator Continues Its Barnstorming... Still, Many Barns Lie Ahead
by Robert Brusca October 8, 2009

The Bank of France monthly business survey continues to show a strong uptrend. The overall industry sentiment index (in red at the bottom of the table) scored a reading of 92 up from 89 in August, a standing of 30% in its range of values and above its average of 90 since October 1988. This is very good news, although the range standing is till quite low. There is along way to go to get to ‘normal’.

The production index has been flirting with positive values in three of the last five months so the move up to 0.59 from -0.77 is not so special this month. That reading compares with a 12-month average of minus 10 and a long term averages of +6. It stands in the 38th percentile of its range.

The production outlook index is up for the second time in three months rebounding from a reading of minus 1.36 in August to +1.23 in September. This reading, too, is better than its 12-month average of minus 7 and below its long terms average of +6. It stands in the 30th percentile of its range.

Demand is still quite negative and is assessed at a reading of -32. That is above the 12-month value of -37 but below the long term average of +1. Still it sits at a weak 16th percentile of its range. Foreign demand (orders) is barely better standing in the in the 19th percentile of its range.

New orders are faring better than the accumulated stock of orders (demand). The new order index fell by 2.62 points after two months of gains. Still the index stands in the 29th percentile of its range.

Job losses stepped up in the current month but the survey is on a definite improving trend. The jobs component for current hiring is in the 59th percentile of its range. For future hiring the index is the 52 percentile of its range and that indicator improved in the month.

In short French industry is still assessed at poor levels. But the improvement of the overall index is quite dramatic and the momentum for continued improvement is still in place. Optimism about France is not about being there but about getting there.

Bank of France Monthly INDUSTRY Survey: SUMMARY
        12 MO Since Oct-88 Percentile
  Sep-09 Aug-09 Jul-09 AVERAGE Average rank/range
Production-latest mo
Total Industry 0.59 -0.77 0.16 -10 6 38.0%
Production Outlook
Total Industry 1.23 -1.36 3.47 -7 6 31.2%
Overall order books -32.7 -37.41 -40.73 -42 1 16.3%
Foreign Orders 1.08 -0.46 -2.01 -14 6 19.8%
New Orders
Total Industry -2.61 4.35 2.89 -12 7 29.0%
Stocks: Finished Gds
Total Industry -6.21 -8.13 -5.44 -5 -2 19.4%
Capacity Utilization 71.73 70.76 70.8 71 77 7.1%
Latest Mo -1.9 -0.57 -7.05 -9 -5 59.8%
Outlook -7.6 -9.98 -8.13 -14 -8 52.2%
Industry Sentiment Index 92.14 89.09 87.59 79 90 30.0%
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