Economy in Brief: September 2023

Manufacturing and Services The INSEE surveys for France in September rose for manufacturing while it remained dead flat for services. The manufacturing survey rebounded to 98.6 in September but was still below its July value of 100.7. The manufacturing rebound in September is limited; activity remains weak, historically at a percentile standing of 31.3% in the bottom third of historic observations.

Manufacturing Climate and production- Manufacturing production expectations in September remained negative but improved to -6.2 from -9.0 in August. The recent production trend worsened, falling to -6.3 from -4.0 in August. However, respondents referring to their own industry reflected a ‘personal likely trend’ that's much stronger at 14.1 compared to 2.5 in August. Survey respondents are downbeat on manufacturing overall, but upbeat on their individual sectors. That's a divergence worth watching. And it's also a rather significant divergence because the standing for the recent industry trend is at its lower 15th percentile whereas the standing for the ‘personal likely trend’ is at its 77.7 percentile. There's an extreme chasm between what respondents think is going to happen to industry overall compared to their optimism on their own individual surveys. Is it optimism or denial? Those two readings on ‘likely trends’ compare to an overall manufacturing production expectation that has a 39.7 percentile standing. That standing is below its 50th percentile, below its median, and weak.

Orders and demand- Orders and demand are little-changed month-to-month in manufacturing. The September value is -21.4 compared to -21.2 in August. For foreign orders & demand, there is slight improvement to a reading of -13.9 in September from -15.1 in August. The percentile standing for overall orders & demand is a 32.8 percentile standing and that compares to a 44th percentile standing for foreign orders & demand; both are below median values, and both are weak.

Inventories- The response for inventory levels declined slightly in September to 14.8 from 17.8 in August, but these are strong values with 87-percentile standing for the September value.

Prices- Prices show increased pressure month-to-month with the ‘own likely price trend’ moving up to 5.2 in September from 2.2 in August compared to the manufacturing overall price trend that moves up to 8.9 from 5.0 in August. The ‘own likely price trend’ in September is still below its July value, whereas the manufacturing price level in September is assessed at twice its July level. The standing for the ‘own likely price trend’ is a 55.9 percentile standing, compared to a below-median 46.2 percentile standing for the manufacturing price level. While the assessment of manufacturing prices is below the assessment for the ‘own unlikely price trend’ the two standings aren't all that far apart.