Global| Sep 30 2004French Industry's Outlook Improves
Summary
The business climate is improving in France. Seen easily in the chart alongside and the table below, French businesses are experiencing a rising production trend and improving order books. The price situation has also shifted markedly [...]
The business climate is improving in France. Seen easily in the chart alongside and the table below, French businesses are experiencing a rising production trend and improving order books. The price situation has also shifted markedly over the past six months.
INSEE's Business survey for September, published today, highlights the "business climate index" at 106, its highest since April 2001 and the 11th successive month above its long-term average (100). An upturn in the general trend of industrial production is a main contributing factor, reaching +12 in September, a third month of positive readings after a dip in the spring. Order books, while still diminishing on balance, are much less weak than they were just six months ago. Foreign manufacturing orders, especially, are approaching a steady position; averaging -6 in the third quarter, they are maintaining their least unfavorable levels since early 2001.
The price situation appears somewhat murky. The assessment of "general industrial prices" is now highly positive, +23 for the last three months running. A year ago, it stood at -9. We'd surmise that the shift in the euro earlier this year from its long uptrend to a more neutral pattern, along with the surge in energy prices, is the major swing factor in this price behavior. Sales price expectations are also firmer than they were a year ago, as slightly more firms believe they can raise prices than not. Even so, this measure of selling prices continues to exhibit much less strength than the general price index, a hint that a price and profit squeeze may be developing for French industry.
| Seasonally Adjusted Balance (except as noted) | Sep 2004 | Aug 2004 | Jul 2004 | Sep 2003 | 2003 | 2002 | 2001 |
|---|---|---|---|---|---|---|---|
| Business Climate Index* | 106 | 105 | 105 | 94 | 95 | 97 | 102 |
| Industrial Production Trend | 12 | 7 | 3 | -25 | -29 | -22 | -23 |
| Factory Order Books | -11 | -11 | -12 | -30 | -26 | -22 | -7 |
| Factory Order Books -- Foreign | -5 | -6 | -6 | -23 | -21 | -17 | -10 |
| General Industrial Prices | 23 | 23 | 23 | -9 | -7 | 3 | 12 |
| Likely Sales Prices | 1 | -2 | -4 | -10 | -7 | -5 | -1 |
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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