Global| Apr 29 2004Business Sentiment Up in Italy, Down in France
Summary
Business leaders in France and Italy tend to think alike, as suggested by the chart at left. The French "General Outlook" index for production has a 75% correlation with the Business Confidence Indicator in Italy. However, in recent [...]
Business leaders in France and Italy tend to think alike, as suggested by the chart at left. The French "General Outlook" index for production has a 75% correlation with the Business Confidence Indicator in Italy.
However, in recent months, these gauges have had opposing moves. In France, a firm recovery in business sentiment during much of 2003 looks to be fading, as the INSEE outlook measure for April slipped back below zero. In Italy, though, improvement persists after a brief setback right at year-end 2003. The "business outlook indicator" sits at 96.5, its highest since May 2002. The accompanying measure of the current assessment of orders for total industry gained from -17 in February and March to -12 in April, also the best reading since the spring of 2002.
Possibly, these divergent movements -- and they're not dramatic, so we shouldn't make too much of them -- are tied to currently uncertain prospects for prices. In France, the "general industrial price level trend" jumped in April to +18 from +6 in both prior months, but expectations for selling prices deteriorated to -6, the weakest in seven months. We can surmise that rising commodity prices, especially for energy, are pushing up input prices, but clearly businesses in France are not optimistic about being able to pass those through to their customers.
In Italy, though, forecast sales prices remain firm. At +11 in both March and April, this is the most favorable outlook for pricing in over three years. Thus, it looks that a better market tone is keeping Italian business executives relatively more upbeat than those in France.
| % Balance, except where noted | Apr 2004 | Mar 2004 | Feb 2004 | Year Ago | 2003 | 2002 | 2001 |
|---|---|---|---|---|---|---|---|
| France INSEE Survey: Outlook for Production Trend |
-10 | 5 | 11 | -60 | -29 | -22 | -23 |
| Price Trend | 18 | 6 | 6 | 1 | -7 | 3 | 12 |
| Likely Sales Price | -6 | -3 | -1 | -6 | -7 | -5 | -1 |
| Italy ISAE Survey: Business Confidence Indicator (1995=100) | 96.5 | 93.6 | 92.7 | 90.5 | 92.4 | 93.9 | 91.9 |
| Total Industry Assessment of Orders | -12 | -17 | -17 | -23 | -19 | -15 | -14 |
| Production Forecast | 20 | 19 | 18 | 11 | 14 | 16 | 13 |
| Selling Prices | 11 | 11 | 9 | 8 | 6 | 6 | 8 |
Carol Stone, CBE
AuthorMore in Author Profile »Carol Stone, CBE came to Haver Analytics in 2003 following more than 35 years as a financial market economist at major Wall Street financial institutions, most especially Merrill Lynch and Nomura Securities. She has broad experience in analysis and forecasting of flow-of-funds accounts, the federal budget and Federal Reserve operations. At Nomura Securites, among other duties, she developed various indicator forecasting tools and edited a daily global publication produced in London and New York for readers in Tokyo. At Haver Analytics, Carol is a member of the Research Department, aiding database managers with research and documentation efforts, as well as posting commentary on select economic reports. In addition, she conducts Ways-of-the-World, a blog on economic issues for an Episcopal-Church-affiliated website, The Geranium Farm. During her career, Carol served as an officer of the Money Marketeers and the Downtown Economists Club. She has a PhD from NYU's Stern School of Business. She lives in Brooklyn, New York, and has a weekend home on Long Island.
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