The overall business climate picked up slightly in October but remains below the long-term average estimate of 100 for yet another month. For some context, the last time the business confidence index met the key level was all the way back in June 2024.
While there are improvements in confidence levels for both the manufacturing and services sectors, the report is not all sunshine and rainbows. Retail trade confidence fell by 3 points to 93 in October, marking the lowest estimate since June. Meanwhile, the employment index also fell significantly to 95 - its lowest since May. INSEE notes that the drop in the employment climate is due to the decrease in the balance related to expected workforce size in services (except temporary work).
Overall, the headline improvement is not exactly an optimistic signal that the French economy is back on the up. The details reveal that businesses are becoming less willing to hire, so that doesn't exactly inspire confidence in the outlook for household spending either - especially when retail sentiment is already looking rather fragile.
Then there's the broader fiscal backdrop to consider. French borrowing costs have been surging, with 10-year yields briefly climbing above 5% this week and the yield spread against Germany widening to levels not seen in roughly 15 years.
So while the headline improvement offers a tad bit of relief, I wouldn't get too carried away. France still has plenty of economic and fiscal problems to work through, and this latest survey does little to suggest that the worst is behind it.
This article was written by Justin Low at investinglive.com.
Source: Investing Live - News
