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Economy in Brief

Bank of France Business Survey Rebounds Then Stalls
by Robert Brusca  October 8, 2020

The Bank of France continues to look for a 16% rebound in Q3 GDP even as evidence shows that the sharp gain from Q2 lows is losing momentum and may have reached a plateau of some sort. The virus is circulating in France again causing countermeasures to be put in place and restricting the evolution of France’s economic recovery.

French coronavirus is spreading and the outbreak is severe. Infections rose to 18,746 as of October 7 by far the largest count in France back to March when data originate. Over 32.5K people have died of the virus in France according to official French statistics. Paris and three adjacent neighborhoods are on the top covid-19 alert level.

Despite what appears to be a significant rebound in Q3, France is facing challenges.

The BOF survey for September shows a backing off of the survey indicator to 101 in September from 105.1 in August.

In terms of month-to-month changes, five of the components are stronger while four are weaker. Weakening on the month are foreign and total new orders, the change in finished inventories and capacity utilization. Strengthening or unchanged on the month was the output change, expected production, order books, and employment vs. last month; the outlook for employment was unchanged.

Looking at changes much more broadly back to February before the virus began taking its toll, the survey indicator is higher in September as is the output change and expected output change as well as the employment indicator vs. a month ago. Still lagging behind their February readings are order books, as well and new overall and foreign orders, capacity utilization is lower by 5.4 points, and expected employment is weaker.

Conditions remain mixed and that is true for the whole French economy as, like every other economy, it is experiencing very unequal sector pressures from the virus itself.

For now France is under pressure from a significant new outbreak of the virus. Economic momentum is being lost. Whether France is on a plateau or something worse is yet to be seen. But it has a significant outbreak of the virus to deal with as it also tries to stimulate growth and extend its economic recovery.

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